Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

HOUSE OF COMMONS.

Oral Answers to Questions — ORDNANCE FACTORY, NOTTINGHAM (SALE).

Mr. HOLFORD KNIGHT: 1.
asked the Financial Secretary to the War Office the amount paid by Messrs. Cammell, Laird and Company for the acquisition of the national ordnance factory at Nottingham under an agreement with the War Office, dated 16th November, 1923?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): In pursuance of the promise given to the hon. and learned Member on 27th July by the late Financial Secretary to the Treasury, further consideration has been given to this matter. The price realised was£440,000, including certain plant and machinery and subject to the conditions attached to the sale.

Mr. KNIGHT: I thank the hon. Member for the information. May I ask whether he is aware that these works are about to close down, thus throwing into unemployment many hundreds of skilled and deserving workers?

Mr. COOPER: The Government are not responsible for that.

Mr. KNIGHT: I do not suggest that they are; but I ask for some consideration for them.

Mr. KELLY: Can the right hon. Member say whether the figure was fixed by arbitration or by negotiation between the firm and the Department?

Mr. COOPER: I think by negotiation.

Mr. MACQUISTEN: The Government appear to have made a very good bargain and Messrs. Cammell and Laird are
probably very sorry that they bought the place.

Oral Answers to Questions — DISTURBANCES, SALFORD AND GLASGOW.

Mr. TOOLE: (by Private Notice) asked the Secretary of State for the Home Department whether he is aware that a, serious disturbance of the peace took place in Salford yesterday between the police and an unemployed demonstration, whether he has any statement to make on the matter, and whether in view of the present national situation and the necessity for avoiding conflicts of this character in this and other parts of the country, he 'will cause inquiry to be made?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Oliver Stanley): As my right hon. Friend explained during the Debate on the Adjournment on the 24th September last, in the county and borough police forces outside London, the local police authorities are primarily responsible for the maintenance of law and order. He has, however, already taken steps to ascertain the facts and will certainly consider whether there is any action, either of a particular or of a general character, which he could usefully and properly take.

Mr. TOOLE: Can the Under-Secretary give me any idea when, I shall be able to get the information from the Home Secretary?

Mr. STANLEY: As I have stated, my right hon. Friend is making inquiries as to the facts of last night's disturbance, and the hon. Member will realise that it will take some time for a reliable statement to be made.

Mr. MAXTON: (by Private Notice) asked the Secretary of State for Scotland if he is able to give the House an account of the serious disturbances in Glasgow last night?

The SECRETARY of STATE for SCOTLAND (Major Sir Archibald Sinclair): My information is that disturbances took place in Jail Square, Salt Market, Steel Street, Greendyke Street, Glasgow Green, London Road, and Hudson Street.
A crowd of about 50,000 met at the places mentioned at 8 o'clock last night. Many of the crowd were armed with iron bars and batons. Windows were broken and the traffic was completely disorganised. There was no organised baton charge, but certain constables had to defend themselves when they were attacked. Three constables and four civilians were injured; others received minor injuries. Twelve persons were apprehended.

Mr. MAXTON: Arising out of the answer, and also the answer given on behalf of the Home Secretary to the previous question, I want to ask the Government whether they are going to take no cognisance of the causes of these disturbances, or are they going to content themselves with measures of repression?

Sir A. SINCLAIR: No measures of repression are being undertaken in Scotland or in any other part of the country. The only measures taken last night in Glasgow were those taken by the magistrates to preserve the public right of passage through the streets.

Mr. STEPHEN: Will the right hon. Gentleman give us an assurance that there will be no obstructions put in the way of His Majesty's subjects engaged in demonstrations as long as the demonstrations are carried on peacefully?

Sir A. SINCLAIR: His Majesty's civil subjects certainly have the right of free speech and demonstration, hut the public have the right of passage through the streets, and this fundamental right of passage through the streets has to be safeguarded by the magistrates, who are the police authority and responsible for maintaining that right.

Mr. STEPHEN: Is the right hon. Gentleman aware that during the previous week there was a demonstration of similar numbers in Glasgow without complaint, peacefully carried through, and is it; not the ease—

HON. MEMBERS: Order!

Major COLFOX: Can the Secretary of State give us any information as to the report that there was organised looting last night in Glasgow?

Mr. SPEAKER: Hon. Members must accept the reply given by the Secretary of State for Scotland.

Mr. GEORGE HARDIE: In some of the newspapers this morning an observer describes what took place. The demonstration was passing down Salt Market. [HON. MEMBERS "Speech!"] I want to know whether the Secretary of State has seen this report of an observer; if so, he would know that it was after the bulk of the demonstrators had gone inside the gates that the police made a rush.

Mr. KIRKWOOD: Arising from the original reply, in which the Secretary of State said that there was no organised attempt by the police against the demonstrators, I want to ask the right hon. Gentleman if he has not had this information, that there were 12 mounted police ready to charge the demonstrators, and that, failing that, there was a special contingent, of police who had been organised, because we have now a new Chief Constable in Glasgow—

HON. MEMBERS: Order!!

Mr. MAXTON: You want force. You do not want to discuss a serious question. There is to be no free speech here either.

Mr. SPEAKER: This is not the time to discuss this matter. Hon. Members had better wait until full information has been obtained by the Secretary of State.

Mr. KIRKWOOD: With all due respect, Mr. Speaker, I want to ask the Secretary of State if he will do what he possibly can to change the demeanour of those in authority in Glasgow towards these poor people, who are right up against it and who are driven by starvation to do things which they would not otherwise do. If something is not done, we will all go down to Glasgow and defy law and order, and you will get a chance of putting every one of us into gaol. If we are, we shall not be satisfied because you will have to take our lives or we will take yours. [interruption.] That is my challenge to you. You can do anything you like. You can fling me out of here this morning, but we are not going to stand by and see our people battered and not, be allowed to raise the matter here.

Mr. SPEAKER: I do not want to make matters worse by dealing severely with the hon. Member.

Orders of the Day — FINANCE (No. 2) BILL.

[ALLOTTED DAY.]

As amended, considered.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Mr. ATTLEE: We have now reached the last stage of a Finance Bill which has been rushed through this House in record time. I rise to express the entire opposition of Members on this side to the Bill. I am aware that on the Third Reading one is somewhat restricted in the subjects with which one can deal. I therefore, took the precaution of re-reading the proceedings on the Finance Bill that was introduced earlier in the year. That Finance Bill, everyone remembers, was noteworthy for a controversy between the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) and the right hon. and learned Member for Spen Valley (Sir J. Simon). The opposition to that Finance Bill was voiced by the right hon. Member for Edgbaston (Mr. Chamberlain), who drew a contrast between what he called the indecent haste with which the Bill had been rushed through and the lethargy of the Government of the day. I can take over those words with regard to the indecent haste, but the contrast I should draw now is not so much between the haste with which this Bill is being rushed through and the lethargy of right hon. Gentlemen opposite; it is between the interest shown in the situation of the country to-day and the anxiety shown regarding political considerations. The question of the finances of this country, the question of balancing the Budget, the question of the Gold Standard, have been thoroughly obscured by the necessity of finding a formula. We do not know yet whether that formula has been found. We do not know how many people have taken the doctor's dose. I do not know whether the Chancellor of the Exchequer has taken his dose this morning.
The Chancellor has broken all Parliamentary records. He has not merely produced two Budgets in one Session; he has produced one on behalf of the Labour party and the other on behalf of the united Capitalist parties. These two
Budgets are based on entirely different social philosophies. The first one still retains, to some extent at all events, the social philosophy which the right hon. Gentleman has preached with such extreme success for the last 30 or 40 years; and the second one is based on a wholly different outlook. It is based on the mentality of the May Report. These two Budgets have, however, one thing in common they are both quite inadequate to deal with the position of the national finances of the day. Both of them were out of date before they reached their Third Reading. This Finance Bill has been necessitated because the Chancellor failed to meet the problem which faced him in the earlier part of the year. He himself expressed the problem quite unmistakably in February of this year. He may be said to have started the scare by his speech in February. But he took no adequate action to meet it, except of course to appoint committees. It has been the trouble with the right hon. Gentleman that he has put his thinking out to nurse.
I think everyone realised that the question that faced this country was the broad question of currency and the whole international financial situation. The right hon. Gentleman put that to sleep under the care of the Macmillan Committee. Instead of facing the urgent economy that he said was needed when he spoke in February, he entrusted that to the May Committee.

Lieut.-Colonel ACLAND-TROYTE: Did not you support that?

Mr. ATTLEE: No, I do not support the May Committee.

Lieut.-Colonel ACLAND - TROYTE: But you voted for the setting up of the May Committee.

Mr. ATTLEE: The first Budget of this year did contain some remains of the right hon. Gentleman's social philosophy. It was really a mixture of the devices of the right hon. Member for Epping (Mr. Churchill) and a kind of reminiscence of the teaching of Henry George. But its inadequacy was revealed before it had got through the Committee stage. In fact the right hon. Gentleman himself admitted that his Budget was unbalanced. The Budget of which this Finance Bill forms a part was produced for two purposes. First of all it was
designed to support an emergency policy to keep us on the Gold Standard; and, secondly, it was designed as a means of restoring confidence abroad by balancing the Budget. As usual the right hon. Gentleman is too late. We had lost the Gold Standard before this Finance Bill had been considered. Therefore, when one discusses the Bill, one can look at the conditions under which it was introduced and the conditions that face us today. It was introduced in an atmosphere of panic. All the features of the national situation were painted against a lurid background of chaos and everything else that would happen if the pound fell. Now the pound has fallen, amid the plaudits of the Press, and to the great satisfaction of hon. Members opposite. The Chancellor of the Exchequer finds in all the papers and, if he listens, in all the conversations in this House, that the one hope in the industrial situation is that he failed to maintain the Gold Standard.
But the very failure of the right hon. Gentleman to save the pound has made it extremely doubtful whether his Budget would balance. A Budget designed on the Gold Standard has now to face conditions when we are off the Gold Standard. Really, the right hon. Gentleman is as much at sea in his calculations even for this year, let alone next year, as he was before he came forward as the saviour of the finances of the country. There is the whole wide question of these borrowings at usurious interest from France and America in an abortive attempt to save the pound. It is going to be a costly business to pay those back, now that the pound has fallen. We shall find that this Budget, like its predecessor, is only balanced on paper. We are told that this Bill and the Budget of which it forms a part are based on the principle of equality of sacrifice—an admirable principle. We cannot judge how far it is carried out by looking at this Finance Bill by itself; it must be considered along with the Economy Bill. These two Bills are the two sides of the "two-handed engine" wielded by the right hon. Gentleman. To a very large number of people in this country he is going to apply that engine on both sides. The unemployed, the host of manual workers and enormous masses
of people of very limited means are going to be hit by both these Bills.
One would have expected to find this Bill almost wholly concerned with raising money from the very rich because the right hon. Gentleman had already done so much against the very poor, but we find that the principle of equality of sacrifice has not been in the least carried out in this Bill. In the course of these Debates a large number of figures have been given. Some have been contested and some have not. Some have been very peculiar. A very peculiar figure was given by the Financial Secretary in which he made out that the man with an income of£50,000 a year lost£4,000 or£5,000 more than his income. That was a very illuminating point to be made by the Financial Secretary and one is interested to know whether the Chancellor of the Exchequer takes the same point of view because this figure was only arrived at by allowing for insurance against Death Duties. From that it is quite clear that the Financial Secretary considers that whatever happens there should be no change in the relative positions of the different categories of persons in this country—that they should be allowed to remain as the wealthy against the poor. That view is very different from what the right hon. Gentleman used to preach.
The Chancellor of the Exchequer in this Bill shows a curious animus against the married man, especially the married man with children. The reductions in the allowances for married men with children are going to hit people very hard indeed. I give the instance I am most acquainted with, that of the married man with four children. In that case the allowances are going to be reduced by no less than£115. I do not know why the right hon. Gentleman has this animus against the married man. It used to be considered that the family was the basis of society. Perhaps the right hon. Gentleman's economic beliefs have been going backwards so steadily that he has now got back to Malthus.
Let us take another example, namely, the contrast between the cuts imposed by this Bill and the Economy Bill on the man with£5,000 a year, on the man with£500 a year, and on the man with less than£50 a year respectively. The
man with£5,000 a year is going to pay an extra£170, equal to 8d. in the pound on his income. The man with£500 a year is going to pay an extra£27, equal to 1s. in the pound on his income, and the man with less than£50 a year is to suffer a cut in unemployment benefit equal to 2s. in the pound. I should not like myself to try to deal with these matters because I know I should not be adequate to do so and I am going to borrow the eloquence of the Chancellor of the Exchequer in a parallel case. In the Budget Debate of 1907 we had just the same position and the question of equality of sacrifice arose then. Let us see what the right hon. Gentleman said then:
Surely the Chancellor of the Exchequer could not defend even for another 12 months a tax equal to 2s. in the£ upon people with incomes so small that if every penny were spent to the best advantage, it was impossible for them to provide themselves with the necessaries of life. Could he defend a tax on these people at 2s. in the£ and the taxation of people with£40 a week, at 9¾d. in the£.
We have heard of the "deadly parallels" but there is the deadly parallel between the right hon. Gentleman, as he was then and as he is now. This point is of some importance because the Finance Bill is something more than a raising revenue. It is an instrument for redressing the inequalities of wealth. We have often been attacked on the ground that that is an illegitimate use of the Finance Bill and our doughtiest defender was always the right hon. Gentleman. The Finance Bill is one of the factors which decides the allocation of the purchasing power of the nation. It decides to a large extent what kind of commodities are going to be consumed and to some extent what kind of commodities are going to be produced. This Finance Bill is the acid test of the sense of values of the Chancellor of the Exchequer.
Everyone will admit that in times of stress the things to go without, are luxuries. The Chancellor of the Exchequer has taxed the poor man's luxuries, beer and tobacco, but he has left alone the rich man's luxuries. Despite the adverse trade balance he has taxed beer, which is largely produced from ingredients grown in this country. If our brewers paid more than lipservice to some of the theories which they preach
it might be made entirely from ingredients produced in this country. But beer is taxed. On the other hand, nothing has been put on imported foreign wines. The right hon. Gentleman has said that if you put any further taxation there, you would kill the trade, but, according to the doctrine of an eminent Member of the Liberal party who spoke of the need for keeping out luxuries, that is just the thing which the Chancellor of the Exchequer should want to do. He has cut down the bare necessaries of the workers. He has seriously hampered people who have a very moderate standard of life but he has left ample room still for luxury on the part of the rich. Of course, figures are given to show how terribly the rich will suffer. I have no doubt some of them will have to go without a certain amount but we have had that cry year after year in this country and it does not seem to affect the prosperity of the West End of London. [HON. MEMBERS: "What about the shopkeepers?"] I contrast the state of Oxford Street with the state of the county of Durham. There still seems to be ample material for pictures, in papers which cater for the snob, of people enjoying expensive amusements. From, the point of view of seeing that a reduced national income is spent to the best advantage this Budget is a, failure.
A considerable part of this Finance Bill is taken up with elaborate provisions in regard to five per cent. War Loan—elaborate provisions for something which is most unlikely to happen. It is very un- likely that they will be effective. I suppose that they are put in just to mark the fact that the most serious problem facing this country is the problem of debt, and that the Chanceller of the Exchequer is aware of that, although he is not going to deal with it. This Bill has been necessitated by the demand of those who control capital that the Budget should be balanced. I oppose entirely the idea that this country's finances are to be ordered and that this country is to be run in such a way as to establish the utmost confidence among capitalists. There was a very illuminating remark by the right hon. Member for Sevenoaks (Sir H. Young), in which he said that our great object should be to make this country one where capital will come because it will get the highest return on its money. That
is not the philosophy of this party. We do not believe that this country should be the happy hunting ground of moneylenders. We believe it should be for people who work, whether by hand or by brain. The real fact of the situation is that this question of the Debt has never been faced by the Chancellor of the Exchequer or by his predecessor. One of the misfortunes of the last seven or eight years is that we have had two Chancellors of the Exchequer who have wandered like babes in the wood, and they have generally been led by the hand by that wicked uncle, the City of London.
The state of national finances designed to be met by this Bill is not something that has sprung up suddenly as a matter of panic, owing to the danger that threatened the pound; it is a position that has been existing ever since we went back to the Gold Standard. It has been dealt with in detail by eminent economists and business men, and the plain fact of the situation is that this country is carrying an inflated rentier class, which it cannot afford. Now I am well aware of all the arguments that can be put forward for the existence of a leisured class, but the fact is that this country has far too large a leisured class. I am not in favour of the methods that were adopted in France and Germany, whereby the burden of the rentier was practically wiped out, but it is pertinent to observe, when we have comparisons made from the other side between the state of this country and the state of other countries, that in France, which is so often pointed out as an example, in effect, by inflation, a very heavy capital levy was inflicted on the reatier class, and it seems to have been so satisfactory that they are now able to lend us money.
The right hon. Gentleman the Chancellor of the Exchequer, unfortunately, has been blinded into always following the interests of the City of London. I hold, with Members on this side and many Members on the other side, that for years the industrialists of this country have been sacrificed to financial interests, and it is quite notable that industrialists are beginning to feel a little more cheerful directly there is a departure from the orthodox financial policy which was inaugurated by the right hon. Member for Epping (Mr. Churchill), and so faithfully followed by
the present Chancellor of the Exchequer. The right hon. Member for Tamworth (Sir A. Steel-Maitland) described the Budget that we had earlier in the year as the last Free Trade Budget. Well, he was wrong. We have had one more, but this may be the last Free Trade Budget, and if it is, it will be very largely due to the present Chancellor of the Exchequer. It has been said, I forget by what writer, that each man slays the thing he loves, and the Chancellor of the Exchequer has been among those who have done most in this country to slay Free Trade, because he has always opposed any constructive policy, and he has never faced up to the question of dealing with the national finances.
The right hon. Gentleman has always been a brilliant critic. Invective has been his strong point. Few people can put a case better than he can, but his only contribution to the sort of thought in our movement has been the use of the Budget as a means for redressing financial inequalities between the different classes. On all constructive measures he has been sterile and obstructive. Unfortunately, the right hon. Gentleman's views have gone steadily back. At one time he was prepared to deal in a broad, statesmanlike way with the problem of society, but his views have changed, and he has gra dually slipped back and back to a mere laisser faire individualism. This Budget is the result of a mind which has not moved forward, a mind that has gone farther and farther back, and now the right hon. Gentleman has produced this Finance Bill. The only rag left is his views on Free Trade, and according to all accounts he is now being asked to swallow them in a formula. He has brought forward this Bill, as the result of a total misconception of the financial conditions of the world and it is an example of that deflationist policy which has done so much to bring the world to its present situation; and we deplore that the right hon. Gentleman should have closed his career with the production of this Budget.

Mr. LAMBERT: May I say that we know the hon. Member for Limehouse (Mr. Attlee), who has just sat down, to be a very able man. I had the privilege of knowing his father, who, like myself, was an ardent Gladstonian Liberal, and I still am a Gladstonian Liberal. The hon.
Gentleman has told us that the Chancellor of the Exchequer took no adequate action to meet the situation last April. In that, I agree with him, but I do not think it lies in the mouth of the hon. Gentleman to say that, because, after all, he supported him, and when he says the Chancellor of the Exchequer's intellect. is destructive and sterile, I would remind him that he found himself in the Lobby supporting the right hon. Gentleman a good many times in the last two years, when I found myself in the opposite Lobby.
I am certain that no one deplores the introduction of this Budget more than the Chancellor himself, and, if I: consulted my own views, I should undoubtedly vote against it. It is a kind of nauseous draught necessitated by previous extravagant living—extravagant Government expenditure on almost every subject. [Interruption.] I want to show that I have the interest of the country at heart quite as much as hon. Members opposite. Government spending does not encourage employment. If it did, we should not have a single unemployed man in the land. We have the highest taxation in the world; this Budget adds to it, and unemployment is still increasing. It is deplorable that hon. Gentlemen opposite—and I say it with all sincerity —should keep demanding more Government expenditure. I am an old-fashioned Liberal, and I am certain that the more the Government spend, the more they will force down wages. This Budget is introduced, of course, to prevent the pound falling. It has not prevented it.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): It was introduced to balance revenue and expenditure.

Mr. LAMBERT: I agree with the Chancellor of the Exchequer. I may have stated it a little wrongly, but, at any rate, he will agree with me that though the Budget was introduced to balance the revenue and expenditure, if that revenue and expenditure had not been balanced, the pound sterling would probably have dropped to a far greater extent than it has done. [Interruption.] I was not dealing with the trade balance, which I could do if it were necessary. I would remind hon. Gentlemen opposite that unless we have a balanced Budget,
the Government, in order to pay its obligations, would be obliged to print notes—

Mr. STRAUSS: They can borrow.

Mr. LAMBERT: Where can they borrow? They have borrowed£130,000,000 from France and America, and these countries will not lend us more money. Hon. Members opposite talk about a bankers' ramp. My experience is that when you have a credit balance at your bank you need not bother about a bankers' ramp. It is when you want an overdraft that the banker can dictate terms. If we had been in the position of a creditor nation as we were before the War, there would have been no need to go to New York and Paris and ask for a loan. We have large foreign investments, I agree, but they cannot at this moment be mobilised. You cannot get buyers for them. I ask hon. Members to realize that it is essential in the interest of the wage earner that we should get clear thinking on this matter. We had no need to talk about a bankers' ramp when we had a large credit balance. It is only because we have not now a credit balance and a balance of trade against us that we have been obliged to borrow from France and America to pay for the imports without which our people would starve. There is no question about it.
Hon. Gentlemen opposite have argued that, if the Government restrict expenditure, they will curtail the spending power of the population. I quite agree; they must curtail the spending power of the population in the interest of the producing wage earner. Unless you restrict consumption in this country you will not be able to pay for your imports. You will have nothing with which to pay for them, and you cannot again go to France and America. Why was a loan asked for from France under the late Government and an extra loan asked for from France and New York? Why would not New York lend any more money?

Mr. EDWARD WILLIAMS: You are restricting consumption by cutting wages.

Mr. LAMBERT: I heard an hon. Gentleman say the other day that the spending power of the population of Bristol will be reduced by£100,000, and that the shopkeepers will not have so much spent in their shops. If hon. Gentlemen go into a provision dealer's
shop, they will find an enormous number of foreign commodities. How do they get there unless someone works here and produces commodities for export with which to pay for them? We are not doing that to-day. It is one of the most terrible things that steady, reliable men should be put out of their jobs and have to go on Unemployment Insurance, and that decent respectable, honest and industrious men should be at the mercy of these external circumstances. These men want to get a living, and they are prevented by some external circumstances.
The Chancellor of the Exchequer said in his Budget speech that one-third of the national income is consumed in rates and taxes. Those who receive this large sum of money consume food and clothing, but what do they do to produce commodities for export in order to pay for them. [An HON. MEMBER: "What does the City of London do?"] The City of London does a pretty big work, and I hope that it will be in future the banking centre of the world. I want to bring home to hon. Gentlemen opposite the fact that unless we can export, we cannot pay for the commodities that fill the shops. I am so certain of this that I cannot understand why anyone can doubt it. When we have one-third of the national income raised in rates and taxes and paid away to people who are not doing a single hand's turn to export commodities, we are bound to have trouble. I do not think that the trouble is over. I look forward to next winter with the greatest apprehension. I am afraid that it will be a black year for many people. We are not nearly through our troubles yet.
Hon. Members opposite talk about equality of sacrifice. [HON. MEMBERS: "Equality of opportunity!"] Well, equality of opportunity; I have been an advocate of that all my life, and it is the only way in which people will get on; but when equality of sacrifice is referred to it should be remembered that the people in receipt of money from the Government or from the rates and taxes have had an enormous advantage during the last few years. Take the case of the agriculturists. They have been suffering all the time—suffering terribly. There is the case of the wheat producer. There has been no equality of sacrifice there. The constituents of hon. Members
opposite have had the advantage of the farmers' misfortunes, and I,. for one, do hope that in the future we shall look more after the producing classes rather than those who are inactive. [HON. MEMBERS: "Hear, hear!"] Hon. Members agree with me, but I would tell them they will not help the producing classes—of whom the major part are the wage earners—by asking for more and more Government expenditure and thus increasing the number of the inactive classes.

Mr. MORLEY: The right hon. Member for South Molton (Mr. Lambert) accuses the late Government of increasing unemployment by lavish Government expenditure, but during all the time the late Government were in office the party to which he belongs were urging them not to diminish that expenditure but very considerably to increase it. He said that as Government expenditure increased the wages of the working-class diminished, but it is true to say that during the last five years the real wage of the working-class has been increased. Does the right hon. Member argue that in the days of Gladstone to which he referred, because Government expenditure was then extremely low the real wage of the working-class was higher than it is to-day If the right hon. Member examines the history of the rise and fall in wages he will find no correspondence between an increase in Government expenditure and a decrease in real wages. If there is any correspondence between them the tendency would be rather in the opposite direction.
In examining this Finance Bill a humble observer like myself would first note that the deficit of£170,000,000 which it has been framed to make good is in reality, an unnecessary deficit. Of that sum,£70,000,000 is made up by transferring an expenditure of£60,000,000 on unemployment insurance and£10,000,000 on the Road Fund from loans to current taxation. What necessity was there for transferring£60,000,000 of unemployment expenditure from a loan to current taxation? The United States of America are faced with a probable deficit on their Budget next year of£250,000,000 to£300,000,000, but they are not trying to meet that deficit by increased taxation. They are raising an internal loan. Why was it not possible to meet the deficit on our Unemployment Fund by continuing
the raising of loans? We are told that there is not less than£2,000,000,000 of idle money on deposit in the bank.

Mr. ARTHUR MICHAEL SAMUEL: Idle money?

Mr. MORLEY: Idle money. Those figures have been given by journals like the "Economist."

Sir WILLIAM LANE MITCHELL: The deposits in the banks are more than£2,000,000,000, but the loans against those are very nearly up to breaking point now.

12 n.

Mr. MORLEY: I am not talking about short-term deposits. If we have short-term deposits to the extent of£2,000,000,000, it would have been possible to raise an internal loan which would have met the deficit on the Unemployment Fund without resorting to taxation. Internal borrowing does not affect the foreign exchanges. The foreign exchanges do not necessarily go adverse to us because there is an increase in internal borrowing. The two have no direet relationship. The American dollar has not depreciated because the United States are balancing their Budget by raising an internal loan of£250,000,000. If it was not necessary to meet the deficit in our Unemployment Fund by additional taxation, still less was it necessary to meet the deficiency of£10,000,000 on the Road Fund by increased taxation. Road Fund expenditure is productive expenditure, and surely it is one of the canons of economics that productive capital expenditure can well be met by a loan. If the same principle as the Chancellor is applying to this Budget were applied to local finance, then every local authority when developing roads or building houses would have to put the whole cost upon the current rates, and in many places we should have rates of something like 60s. in the pound. My argument is that this deficit of£170,000,000 is an exaggerated deficit, swollen by£70,000,000 put on to current taxation which might well have been met, without any danger to the stability of the pound, by internal borrowing.
The next thing that strikes one about this Finance Bill is that in order to meet this deficiency most inequitable and punitive taxation has been imposed. The taxation upon beer is to be increased by£10,000,000 a year. Before this the yield
of taxation upon beer was£75,000,000 a year, it is now to be increased to£85,000,000. The consumer of beer will pay more in taxation than is yielded by the whole of the Estate Duties, more than the yield of the Super-tax. This increased taxation upon beer is definitely a class tax, because it is the working classes who are the chief consumers of beer. There is no increased taxation upon whiskey, spirits or wine. The whole of this increased taxation is put upon a commodity consumed by the working classes. It may be said that beer is a luxury, and as such is a proper subject for taxation, but why are only the luxuries of the poor to be subjected to additional taxation? Are there no luxuries of the rich which might have been taxed? We all know how domestic service has been affected by depression in the industrial areas. Frequently we see advertisements in the Conservative newspapers in the following terms: "Parlour maid required, two in family; five other maids kept." Any woman who can afford to have six maids to pander to her vanity and snobbery can afford to have a further tax placed on such luxuries.

Mr. SPEAKER: I would remind the hon. Member that the Third Reading of the Finance Bill is not the occasion for suggesting alternative proposals for taxation, and he must confine his remarks to the actual proposals contained in the Finance Bill.

Mr. MOBLEY: I was trying to show that a large part of indirect taxation fell upon the working-classes and not upon the luxuries of the more wealthy classes. With regard to direct taxation, the Chancellor of the Exchequer seems to have been somewhat inconsistent in his attitude during the past year. The right hon. Gentleman told the Labour party at their meetings that the limit of direct taxation had been reached, and that to impose any more indirect taxation would be entering into the regions of diminishing returns. The right hon. Gentleman told the Labour party when he was Chancellor of the Exchequer in a Socialist Administration that it was impossible for him further to increase direct taxation, and I would like to ask him why it is possible for him to increase direct taxation when he is Chancellor of the Exchequer in a capitalist Administration? Under this Finance Bill, the main burden
will fall, not upon the rich, but upon the middle-class, and more particularly the professional middle-class, people with incomes between£500 and£800 a year.
It is estimated that this Bill will increase the yield of the Income Tax by£51,000,000, adding more than 20 per cent, to the previous yield of the tax. The yield from the Super-tax under this Bill will be£6,000,000 more, and that is only about 10 per cent. above its former yield, as compared with 20 per cent. in the case of smaller Income Tax payers. On this side of the House, we think that it would have been far more equitable if the Chancellor of the Exchequer had placed a larger percentage of increase en Super-tax payers, who are estimated to receive£550,000,000 out of our national income. I feel sure that the proposals of this Measure will cause considerable resentment among middle-class taxpayers. In these circumstances, I do not wonder that the new Government desire to have a snatch election before the demand notes for the Income Tax are sent out.
The right hon. Gentleman the Member for South Molton (Mr. Lambert) asked the Labour party why they did not protest against the policy of inflation before these proposals were made. Some time ago many of us were constantly putting forth the argument that, the Chancellor of the Exchequer was pursuing a wrong policy by encouraging deflation, and pointed out that there was danger in remaining anchored to the Gold. Standard, but the right hon. Gentleman ignored our advice and did not even endeavour to answer our argument. The Chaneellor of the Exchequer seems to be so gratified that he has now mastered the intricacies of finance that he does not wish his proposals to be altered. On this side of the House, we have frequently pointed out the dangers of the policy which has been pursued by the Chancellor of the Exchequer, and therefore many of us must be absolved from any blame for the result of the course which the right hon. Gentleman has pursued. I think the taxation which is proposed under this measure is very unfair in its incidence, and I feel certain that when there is an appeal to the country hon. Members opposite will find that the proposals in this Finance Bill
will be very difficult to defend, and will cause a considerable amount of antagonism.

Sir ASSHETON POWNALL: With regard to what has been said about an appeal to the country I shall be only too glad to have an early opportunity of defending these proposals in my own constituency within the next few weeks. I am anxious to deal with one of the points which was raised by the late Postmaster-General who spoke about the position which arose in France on account of the policy of inflation. I happen to be one of those unfortunate individuals who conic under the rentier class because I invested some money in French Loans during the war. I may say that I lost four-fifths of the income so derived from that,source, and on account of depreciation the capital only represents about one-fourth at the present time; consequently, I am in a position fully to appreciate the troubles of the rentier class. Hon. Members opposite have made no alternative suggestions for balancing the Budget, and if we are not going to inflate how else can you balance the Budget with its appalling deficit except by printing more Bank of England notes, which itself is a process of inflation. There is no remedy for balancing this Budget but inflation. Fears were expressed as to what might happen when the pound stood, at 17s., but without venturing to prophesy my own view is that but for the proposals contained in this Finance Bill the value of the pound would have gone lower still.
With regard to the difference in the value of money, this is a point on which the Socialist party cannot have it both ways. They say that the rentier class is much better off than it was in 1921, because of the decrease in the cost of commodities, and yet they criticise severely any reduction of the family allowances. The general scheme of Income Tax proposals dates from the time when the Royal Commission was appointed. At that time, in November, 1920, the cost of living was 176 points above pre-War, and there was an abatement of£225 for family allowances in the Income Tax. Therefore it is not unfair to compare those two figures, because now£150 is appreciably more than£225 was then. With regard to the
1920–21 figures, I should have thought that the hon. Member for East Leicester (Mr. Wise) would never have ventured to compare the cost of living of 1921 with the War Loan period of four or five years before that time. It is true that the rentier class has derived advantages in recent years in regard to the cost of living, but it has only represented a small amount and neutralised part of what had been taken away from them by the increase in the cost of living. The 1917 War Loan was floated when the cost of living was 70 per cent. above pre-War. I agree that at the moment it is roughly 50 per cent. above pre-War, but in the last six or eight of the intervening years it has averaged over 70 per cent. above pre-War. Therefore, the man who in 1917 borrowed money, it may be, from his bank, and put it into War Loan, has been daring the last few years actually worse off than if he had kept his money in other investments, and, although it is true that at the moment he is slightly better off, one has to bear in mind, in speaking of the value of these people's money in War Loan, that they are now paying in Surtax far more than they paid in 1917. If they do get a small advantage as regards the cost of living, they are paying a great deal more in taxation, although it is 13 years since the War ended. We Are going to hear the figure for 1921 quoted 'very often in the course of the next month, but really, when you come to analyse it, it is a most dishonest figure from an economic point of view, and it is just as well that that fact should be pointed out.
There is one further point with regard to the general aspects of the Budget. I realise the difficulties through which the late Government passed during their 2¼ years of office. We were a little tired sometimes of hearing the phrase "economic blizzard" from those who then sat on these benches. After all, Governments in the past have had to contend with "economic blizzards." But the trouble in those 21 years was we had both an economic blizzard and a Socialist Government, and you cannot cope with them both at the same time.

Mr. STRACH EY: We have before us the Third Leading of a Bill the object of which is to balance the Budget. And, of course, the Chancellor of the Ex-
chequer is perfectly right in saying that from the point of view of the stability of British capitalism it is a hundred times more important to British capitalism to balance the Budget after the sacrifice of convertibility than before. The sacrifices which British capitalism calls upon the workers to undergo will be far more ruthless and severe after convertibility has gone than before. We may find agreement upon that, but it completely destroys the argument we have heard from the Front Opposition Bench that it is no longer necessary to balance the Budget—[Interruption,] The right hon. Gentleman may not have said so, but we have heard it many times from those benches. I should like to ask this question. The Chancellor of the Exchequer tells us that this Budget and local taxation combined will mean that approximately one-third—

Mr. P. SNOWDEN: Nearly one-third.

Mr. STRACHEY: He tells us that something like that proportion of the total national income will be raised by taxation. I would ask him, does he think that that is possible, because I think I am right in saying that in no capitalist country in the world has it ever been attempted. I think most of the authorities state that some 20 to 25 per cent. is the highest proportion that has ever been raised by taxation in a capitalist economy. When we are making up our minds about this attempt to balance the Budget, and as to which side we shall vote upon, we must ask ourselves: Will this Bill balance it Is it possible to raise this proportion of the national income in a capitalist economy? I would seriously ask whether the Chancellor of the Exchequer or the Government think it is possible. I believe that the figure has been approached in Germany in recent years, but I doubt whether, even there, anything like one-third of the total national income has ever been raised successfully by the Treasury of- a capitalist country. I believe that the crisis for British capitalism has become so severe that it has become an impossible task to attempt to balance the Budget in this way. The fact is that taxation at this level is incompatible with the capitalist system.
I have never been what is called a taxation Socialist. A great many Members on this side of the House believe
that it would be possible to introduce by a gradual process of taxation many of the advantages of a, Socialist system, but I think the present crisis has conclusively proved the impossibility of that method of introducing Socialism. But not only is it impossible to introduce Socialism by taxation; it is now impossible to keep up capitalism by taxation. You have reached a point where your crisis is so severe in this country that not only can you make no progress along the line of social development by the instrument of taxation, but actually you cannot even maintain the present level of development by that instrument. I should seriously like to know the opinion of the Government, as the guardian of the capitalist system in this country, whether they think that one-third of the total national income can possibly be raised by taxation, and, if they do not think it can, what their object is in proceeding along these lines in the present Budget.
That is the first doubt that I should like to express—as to whether this Bill will succeed in its real object, which is to balance the Budget this year. But, even if that question be answered in the affirmative, and if it be physically possible by taxation to raise this proportion of the national income in a capitalist country, there is the further great complication that it is by no means certain whether this Budget will in fact balance, because, during the year which expires during its currency of operation, it is highly probable., to my mind, that there will be a degree of internal inflation in this country that will so raise prices that the Budget will again become unbalanced. Whether that happens or not depends upon whether the drop in the exchanges does in fact turn the balance of trade in our favour again or not, and so the very question of the balancing of this Budget will depend on that fundamental question, whether the tariff on imports, and bounty on exports, of some 25 per cent. which the drop in the exchanges has given, does have, as it theoretically should have, the effect of turning the balance of trade in our favour again. If it does have that effect, internal inflation may possibly be avoided, but, if it does not, then, undoubtedly, internal inflation will occur; and I suggest to the Chancellor of the Exchequer that the events which have taken
place since convertibility was abandoned in this country go very far to show that other factors will supervene and prevent that turning of the balance of trade in our favour which the drop in the exchanges might have been expected to bring about.
I should like to hear what proposals this Government, or any future editions of it, may have for turning in our favour that balance of trade which I believe it is becoming apparent will not turn in our favour automatically. The favourite remedy of a tariff will, of course, be entirely useless in that respect, because when the exchange is running the effect of a tariff is merely to raise the rate of exchange again, and to offset itself completely in that way; it will not have the same effect as if the exchange were fixed. I merely allude to that fact in passing. What measures have this Government or future Governments of this country to propose for doing that fundamentally necessary thing without which this Budget will be completely unbalanced, namely, to turn the balance of trade in our favour? It ought to turn itself in our favour by the mere devaluation of the pound which has occurred, but the number of countries which are coming off the Gold Standard will counterbalance the apparent rise in the pound which is taking place, and which I suggest is not really a rise in the pound, but a fall in the other currencies against which the pound is measured.
Then there are the effects of the protective duties which have been raised already in other countries, as has actually happened in Italy and as is proposed in France and Germany; the restrictions and the protective measures which foreign countries will take against our exports of goods now that we have the 25 per cent. bounty of the drop in the exchange, the whole refusal of the world capitalist system to reduce duties, the deepening of the crisis which is obviously going on in America. All these symptoms suggest that the undoubted advantage, got at the expense of the wage-earning class, which the devaluation of the pound might have been expected to give to the British capitalist system is not in fact going to be given. The mere fact of losing the convertibility of the currency in this one of the greatest capitalist countries in the world is profoundly damaging the whole world capitalist system. With every week
and every day that passes since the abandonment of gold by this country we see: that system in greater and greater chaos. We may expect, not a greater, but a smaller export trade and a worse balance of trade instead of a better, and we may expect, therefore, that all efforts to balance the Budget will become completely futile. The important events since the abandonment of convertibility in this country have been of the most profound significance and have shown that the crisis in world capitalism is far deeper than any of us may have supposed; there is no stability and no possibility of stability in this system and all these efforts, of which this Budget is merely the principal one, to get back to capitalist stability, will prove absolutely futile. There is no firm ground to which the pound or any other item of capitalist stability can be linked. Neither the export trade nor any other trade in this country will ever revive so long as we have a capitalist system here and in the rest of the world.

Marquess of HARTINGTON: The hon. Member has asked the Chancellor of the Exchequer whether he believes it possible that the individualist system can survive the crushing weight of taxation that it has to bear. I will not take it upon myself to answer that question. It really amounts to this. He says, "the burden on our camel's back is too heavy. The camel's back will break and the best thing we can do is to kill the camel." I think most people travelling through difficult country would be inclined to say on the whole that better than killing our camel is lightening his burden. Like the hon. Member, I think it is very doubtful whether trade and industry can continue to bear burdens so heavy as those that it has to bear now, which have bean increased by the present Budget. But I am not so excessively gloomy as the hon. Member. I believe that as a temporary measure in an emergency the taxpayers will make the great effort that is demanded of them. It used to be an accepted theory of warfare that no troops were available for further service who had suffered losses of more than 20 per cent. That reminds me very much of the occasion on which I first met the ex-Postmaster-General. I met him first as a soldier serving in a regiment which had certainly suffered losses very much more than 20 per cent. Then he belonged to
a force which had suffered losses in the field of 20 per cent. To-day lie belongs to a force which is about to suffer losses of at least that amount. He was then courageously, pertinaciously and painfully pursuing an attack upon the entrenced heights. To-day he is pursuing, as courageously, as pertinaciously, as painfully, and as completely unsuccessfully, an attack upon the Chancellor of the Exchequer.
The real point to which I want to address myself is the profound difference of opinion that exists between the majority of Members on these benches and on those on the question of taxation. No one in the House likes this Budget in the least. We all recognise that it is a very disagreeable and painful necessity, but we on this side shall be able with a clear conscience to go into the Lobby in support of it because, although we may not like various features of it, we recognise that it is an honest and courageous attempt, and on the whole we believe the best that could be made, to carry out an extremely difficult task. Hon. Members opposite, on the other hand, will, with an equally clear conscience, be able to go into the Lobby against it because they honestly believe that it is a harsh, unjust and oppressive Budget. They believe that it distributes the burden unfairly and that the money, which must be raised, could have been raised more fairly by concentrating on the higher ranges of Income Tax and Surtax. That belief is based on what I believe to be a really fundamental misconception, a conception that there exists somewhere a pool or surplus of wealth which has only to be tapped to make every one prosperous and happy.
All through these Debates we have had the cry that we are still a rich country with ample resources, plenty of rich men, abundant wealth and that it is monstrous, while Super-tax payers still enjoy large incomes, that the burden on the poor should be increased. Hon. Members opposite really believe that by using taxation as a weapon of distribution you can solve the problem of poverty. I believe any conception of taxation based on that theory must inevitably break down, because the accumulations of the rich are already doing the very maximum of which they are capable in paying wages and finding employment.
Hon. Members opposite talk of a man with an income of£1,500 or£15,000 as if in some way he can keep that income to himself. It is only necessary for him to put up with less for other people to have more. Actually it seems to me that, is very far from being the case. Actually the only way in which a rich man could avoid sharing his income to the fullest extent with the wage-earners would be by converting it into gold and hiding it. There is no other way, as far as I can see, in which he could stop his money going into circulation, relieving poverty to every bit as full an extent as if the whole of it was taken by the tax gatherer.and distributed by State officials. Suppose that he saves it. Hon. Members opposite have referred to idle bank deposits. They must be aware that those bank deposits are security for loans which are lent to the limits of safety, and those limits have been exceeded. They have been lent ten times over. A man who leaves money in the bank furnishes capital for industry. If he spends it, however selfishly, he still cannot avoid it passing into circulation, going through countless pockets, and filling as many mouths as if it was spent directly in the distribution of unemployment benefit. It is always agreeable to
compound for sins 'you' are inclined to By damning those 'you' have no mind to.
Suppose he spends it in what I regard as the worst of all possible ways of spending, by taking a trip to Nice or Cannes, with the new party, even then, if there is anything in the Free Trade theory of hon. Members opposite, all that he does is to give the French banker a cheque on London, which, except in very exceptional circumstances, he can only cash by taking exports from England. I agree that he ought not to spend his money in that way, but even then he cannot keep it out of the wage fund of this country. He may spend it well or he may spend it badly, but, however he spends it, the money must circulate through a great many pockets and must, in the long run, add the maximum amount of which it is capable to the wage fund of the country; and it will be far more effective than if it had been taken away by the tax gatherer and distributed in relief.
The truth has been brought home to everyone. Everyone is under the neces-
sity, in these days, of considering his own personal expenditure. This Budget makes economies necessary for everybody. One tries to find ways of adjusting one's expenditure. You go through your own personal consumption. It will not stand a new burden. That is where hon. Members sometimes get confused. They get mixed up between expenditure and the consumption of wealth. The rich man's real consumption is not so many thousands a year which he is enjoying at the expense of other people. The real drain on the supplies available is not what he spends in money, but what he consumes in real wealth. However rich he may be, his actual consuming power is very limited indeed. If you take the richest man in the world, he cannot eat any more than any other man, and, if he is the fattest man in the world, he cannot wear at one time more than one suit of clothes, or hoots. His consuming power is very limited, and it is only in what he actually consumes that he can possibly take more than his share of the real wealth available.
He may spend enormously. Every farthing he spends which is not spent on consumption directly is merely transferring consuming power to someone else. It is going into the wage fund. When one has to make economies one goes round one's personal expenditure. Obviously, one's personal consumption will not stand it. One can cut down tobacco and drink. It is satisfactory to think that in that case the Chancellor of the Exchequer shares to a very large extent in any economies one has to make. One can go round and consider various other economies. Take my own case. I can decide to shoot less, to cut out the theatre, and to go home in an omnibus or tram instead of a taxicab, or walk instead of going in an omnibus or tram, and make various economies of that kind. But all those economies on being analysed must come, in the end, out of somebody else's pocket. That is absolutely inevitable. The personal consumption being so very limited, as it must be, it is only possible to make economies either indirectly in the ways indicated or directly by dismissing servants or cutting down wages. That is the only way in which economies are really possible.

Mr. WEST: Does the Noble Lord really believe that this money would.not give as much employment if spent by the old age pensioner as it would if it were spent by the Noble Lord himself.

Marquess of HARTINGTON: I will come to that point in a moment. I was going to deal with it. But to continue my argument, at the moment I believe that it is absolutely indisputable that by taking consuming power from the direct taxpayer you are not really solving any problems but only creating new ones. This is where I come to the point which the hon. Member has just raised. The same thing applies to a considerable extent to indirect taxation. Indirect taxation in the present crisis is not so vicious economically as direct taxation. Indirect taxation tends more to restrict the consumption of imported commodities directly, and it tends less to restrict investments and money circulating through more pockets. Indirect taxation, I believe, affects fewer people's wages, and to that extent is less evil than direct taxation, but it remains the case that all taxation is bad. If a man pays more for beer and tobacco, obviously he has to spend less on something else, and it is in that way vicious.
There is a great difference between expenditure by individuals and expenditure by the State. The tendency during all these years has been steadily to transfer spending power from the individual to the State. But that policy has not been a success. That policy is almost directly responsible for the prodigious volume of unemployment we have to face to-day. I believe that it must be disastrous, because, speaking broadly, there is this difference. The hon. Member opposite said that consuming power in the hands of old age pensioners and people of that sort is as valuable in real wages as consuming power in the hands of the wealthy. I think that he is wrong for this reason, because consuming power goes more into imported commodities. That is one reason.
The other reason is that, broadly speaking, spending power in the hands of individuals is spent on wages; spending power in the hands of the State tends more and more to be spent, not upon wages, but upon the relief of unemploy-
ment. Spending power in the hands of individuals goes to promote trade. Spending power in the hands of the State—which is obviously proved by the facts and figures of any Budget—goes to mitigate the poverty it creates. One fosters trade, and the other mitigates poverty caused by had trade. The course of events during recent years shows quite clearly that you have ever-growing taxation and unemployment and a consequent demand upon taxation. Expenditure by the individual supports those who are economically sound and fit, and expenditure by the State supports those it has made economically unsound and incapable of keeping themselves. That is one reason why expenditure by the State on the vast scale you have seen lately is definitely bad for the community.
There is another great drawback which was referred to by the right hon. Member for South Molton (Mr. Lambert). The drawback to expenditure by the State as high as that which is going on to-day tends, and must tend, to draw from the service of commerce and industry many of the ablest brains available. We have created vast and complicated machinery of Government which has attracted an enormous proportion of the ablest men year after year. It diverts those people from production and from productive commerce to tasks which, I believe, are at best sterile and nonproductive, and at the worst, actively obstructive and maleficent. We ought to spend enormously less on salaries of officials than we are spending to-day, and, if we did, we should give our exporting trades an enormously greater chance than they enjoy to-day. Therefore, although I believe that the present Budget may be inevitable to-day and that we ought to support it, I do not believe that we ought by any means to be satisfied with it. We ought to realise that the right way to balance the Budget is not by raising more money, however we do it, but by spending less. In the enormous field of Government expenditure, there is still scope for very large economies. Indeed, economies much larger than have been suggested yet. We have been diverting to the service of the State large sums of money which would be far more fruitful in the pockets of the taxpayers. We ought not to rest content with a balanced Budget, which
has been balanced courageously but on far too high a basis. We must realise that people cannot possibly live on taxes or on Acts of Parliament. They can only live on trade, and trade cannot flourish under a burden of taxation such as it has to carry to-day.
We must face disagreeable facts and cut down our national expenditure. Our people cannot live on the proceeds of taxes or for more than a few months consume more real wealth than they produce, but only on the interchange of trade and commerce, the real wealth of the State. We must try to build up our production, and then we can fairly look forward to the return of prosperity. We have to make up our minds that we cannot permanently rest content with Budgets anything like as large as this. We have a real chance now. We had a great chance in 1919, but we threw it away with both hands. We occupied then the most commanding political and economic position which any country has ever had, but we threw it away with both hands. Politically we truckled to our enemies whenever they showed themselves. We spent recklessly, and we wasted an enormous portion of our substance in industrial disputes. We have another chance to-day—I do not take as gloomy a view as the hon. Member opposite—but we must realise that that chance will not recur, and if we go on saddling our trade with the cost of the enormous machinery of Government which it has to carry to-day, we shall lose that chance.

Mr. ERNEST WINTERTON: The Noble Lord has given the House a very remarkable exposition of the theory of the distribution of wealth, which has apparently received the assent of those who are supporting the National Government. I have been somewhat amazed at the development of his argument, although it has been of a very interesting character. He suggests that we are not producing enough in this country and that it is necessary for us to increase that production. May I suggest to him that the facts are all the other way? Our trouble is not a failure to produce the things which are needed, either by this country or by the world in general. The great trouble is, as the noble Lord himself admitted, that the falling off in trade, the world slump in trade, has made
it impossible for us to market the things which even in our own country we are able to produce in abundance. I was rather surprised that the noble Lord should have suggested that one of the reasons for the unemployment difficulty which is arising, and the great increase in unemployment, is due to high taxation. He apparently thinks that in our difficulties in maintaining our balance of trade and increasing our export trade, the factor of taxation is a very considerable one.
I should like to call the attention of the Noble Lord to the fact that there is not a single industrialised country which, during the past two years at least, has not shown exactly the same comparative and parallel falling off in its export trade as has Great Britain. In nations where taxation is low, such as Czechoslovakia, Japan and Italy, we find the same reduction of export trade corresponding to the world slump that we find in the older industrialised nations. That knocks the bottom out of the argument that our difficulties arise from high taxation. They are arising from the fact that the world has got into a position from the industrial standpoint of being able to produce more than the people are empowered, by the distributive methods, to consume. The problem that the Noble Lord has to solve is the problem of how to distribute among the people of the world an effective purchasing power by which they can consume even that which is now produced. That, I think, is the philosophy which separates this side of the House from the Noble Lord and his friends.
The Noble Lord spoke in a very entertaining way of the personal economies which, in consequence of this Budget, he will feel it necessary or advisable to put into operation. He seemed to imagine that those economies were going to improve the present situation.

Marquess of HARTINGTON: indicated dissent.

Mr. WINTERTON: The Noble Lord shakes his head. If he does not think so, why does he make those economies?

Marquess of HARTINGTON: My whole argument was that these economies are necessary, but I was trying to show that they would only make things worse.

Mr. WINTERTON: That is an exceedingly valuable admission from the Noble Lord, that the Budget now before us, which he is supporting, is going to make things worse. That is the contention which we have made from this side of the House since the Budget was first introduced. I should like to pursue the suggestion about the economies which the introduction of this Budget will make necessary in the case of the Noble Lord himself. He imagines that the present use of the surplus which he is not able to consume himself, for example, the shooting in which he is engaged, the keeping of horses and the other ways in which he spends his surplus revenue, are equally as effective as if they were distributed by the State in unemployment benefit, in old age pensions, or in pensions to ex-Service men. There is a great deal of difference between the labour power which obtains in some methods of spending and the labour power in other methods of spending. There is luxury spending which practically produces no real employment.
I am sorry that the right hon. and gallant Member for Burton-on-Trent (Colonel Gretton) is about to leave the House, because he was going to be the point of my argument. The Noble Lord suggested that the increased taxation on beer would mean that the beer drinker would reduce his expenditure on other necessaries. May I suggest to him that if the money spent on beer were spent on other necessaries, the labour power produced in the spending on those necessaries would be far greater than the employment value in the expenditure upon luxuries. The whole point against the argument advanced by the Noble Lord is, that he imagines that every kind of spending, so long as the money goes round and circulates, will produce exactly the same labour demand, when, as a matter of fact, in the trade represented by the right hon. and gallant Member for Burton-on-Trent, would only employ one-tenth of the labour which would be employed in such trades as furniture production, house-building, the provision of boots and shoes, or the growing of food.
We cannot accept the suggestion that this Budget is to be decried because it makes a difference to the Noble Lord's expenditure on his personal luxuries or comforts. It is, in essence, rather an ad-
vantage, if an instrument of taxation forces a part of the community to a wiser and more economic expenditure of the means that they possess. It is not spending alone but wise spending, as the Prime Minister said a little while ago, that matters. He said that we ought to spend on British goods, but, whether the goods be British or not, the true economist must try to discover how his expenditure will produce the greatest demand for labour. The Noble Lord spoke of the distribution of our national wealth by the officers of the State. Those highly-skilled administrative civil servants are performing a great service to the community, because they are doing what the supporters of the theory of the Noble Lord have been unable to do; that is, to distribute more equitably among the citizens the available wealth. They are producing it and distributing it in channels where the spending of it will be likely to make far greater demands for employment and for goods than by methods which have been followed by the Noble Lord.
The Noble Lord has told us that a man cannot wear more than one suit of clothes or eat more than one meal. If the wealth which has been accumulated by the whole of the community could be distributed so that hungry people could get food and those without clothes could get a new suit of clothes, that would do far more than other kinds of distribution, whether carried out by the State or otherwise, to add to the happiness of the people, and far more than the tariff nonsense and other suggestions that are made from those benches.

Lieut.-Colonel Sir A. LAMBERT WARD: The hon. Member for Loughborough (Mr. Winterton) has repeated the amazing statements which I have heard on several occasions from hon. Members on that side of the House. They should remember that at the present moment there is more than£2,000,000,000 of idle money in the banks. In what form does the hon. Member imagine that those deposits are being kept? Does he think they are merely figures in a ledger? If so, he will learn in due course that the figures in a ledger have to be hacked up in a tangible form. I presume he thinks that they are kept in some tangible form. It is a platitude now, because everybody is aware of it, that there is only
£130,000,000 of gold in the country. Does the hon. Member think it is in currency notes? The entire issue of currency notes only totals£400,000,000, and, if the whole of that issue were lying on the counter of the bank, we should only then have less than a third of the amount of the deposits.
Let me tell him what has happened to the deposits. They have all, except 10 per cent., been lent out to the industries of the country. Practically the whole of the deposits which are represented in the books of the banks have been lent out; most of them to the cotton, steel, shipbuilding and agricultural industries. If the banks were called upon at any moment to produce those deposits, I very much doubt if they could produce even 10 per cent. of them. The whole of the money is being used to the advantage of the industries. Most people will realise that it is impossible to use the same money twice. It is an absolute fallacy to state that there are deposits to anything like the extent that has been stated lying liquid to be used in new fields by capital. There is another factor which tends unduly to swallow the deposits in the banks at the present time. If anybody wants an overdraft he goes to the bank to arrange one. If he obtains an overdraft for£100, that overdraft is then put down to his credit, and, although it is only a book transaction inside that bank, it is reckoned as a deposit.
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The fact that this Budget, the second Budget in a year, bas been attacked impartially from both sides of the House, goes to prove that a rough-handed measure of justice has been handed out among the various taxpayers, who all hope that they will never have the misfortune to see a repetition of two Budgets in one year. It is absolutely essential to maintain as large an amount of money in this country as we can. There is not the least doubt that high taxation tends to dissipate it. The hon. Member for Aston (Mr. Strachey) said it would be impossible to maintain so high a rate of taxation in any country as one-third of the national income. That depends to a very large extent upon the good will of the taxpayer. If that good will can be maintained, a high level of taxation can also he maintained. The hon. Member for Aston instanced the case of Ger-
many, where a level of taxation of approximately that amount had been tried and has utterly failed. That was almost entirely due to the German taxpayers being unwilling victims, and having done their utmost to avoid taxation by transferring their capital abroad, either in their own names or in other names. One of the principal reasons which caused that high rate of taxation is a great danger here. We may lose by this high taxation the good will of the taxpayer and may encourage not only ordinary evasion but the much more effective form of evasion, that of transferring capital abroad. Whatever legislation may be passed, as was shown ill Germany, can only have the very slightest effect in preventing the flight of capital.
I am voicing the opinion of a great many hon. Members when I say how pleased we are to see that some attempt is to be made to deal with the War Loan and to endeavour to effect a decrease in the annual expenditure on interest. With the War Loan standing below par, it is almost impossible to reduce expenditure upon interest unless we choose to indulge in some form of repudiation. There are only two ways of dealing with a debt of any kind. One is to honestly pay it; and the other to repudiate it. In the long run it pays everybody to deal with a debt honestly rather than attempt any form of repudiation. The object of the proposed conversion is to reduce the interest which has to be paid, and I hope we shall see it reduced from 5 per cent. to 4 per cent. The great difficulty of course in dealing with War Loan is the gigantic amount which is abroad. It is a sum of£2,000,000,000, and any conversion or refunding of a sum of that character cannot be undertaken without enormously disturbing the money market not only in this country but throughout the world. I have a suggestion to make to the Chancellor of the Exchequer which perhaps the Financial Secretary will transmit to him. Is there any reason why we should attempt to convert all this sum at once? Why should we not do it bit by bit? I have read the prospectus very carefully and I cannot see anywhere that the whole of this gigantic sum of£2,000,000,000 must be repaid at once between the years 1929 and 1942. It does not say, as far as my reading of the
prospectus goes, that the whole of the amount must be repaid at any one time.

Mr. KELLY: May I call your attention, Mr. Deputy-Speaker, to the number of Members in the House at the moment.

Mr. DEPUTY-SPEAKER (Captain Bourne): I gave a Ruling on a similar point the other day, and I adhere to that Ruling.

Mr. KELLY: Do I understand that you have made up your mind that throughout these Debates there is to be no "count"; that no matter how small the attendance is no notice is to be taken of it?

Mr. HOLFORD KNIGHT: Is it not the case that a "count" is never taken during the luncheon hour; and that that is a convention usually respected by gentlemen?

Mr. KELLY: There is nothing in the Standing Orders with regard to the luncheon hour and the hon. and learned Member for Nottingham South (Mr. Knight) had better read the Standing Orders.

Mr. DEPUTY-SPEAKER: In reply to the hon. Member for Rochdale (Mr. Kelly) let me say that inasmuch as the Bill is being considered under a Guillotine Resolution the answer to his question is in the affirmative.

Sir A. LAMBERT WARD: The hon. Member for Rochdale (Mr. Kelly) must of course have his little joke. I was asking whether there was any reason why we should not deal with the conversion of the 5 per cent. War Loan piecemeal. Let us imagine that the Treasury have a sum of£100,000,000 earmarked for the redemption of Debt; is there any reason why they should not proceed on the lines on which practically every foreign government proceeds, that is by drawing the names of the holders of War Loan to the value of£100,000,000 and duly notifying those holders that on and after a certain date the interest on their holdings would he reduced automatically to 4 per cent., but that if they choose to give notice in writing at any time up to one month or three months that they would be repaid in full. It depends a great deal on the psychology of the bondholder as to what action he would take. I am inclined to think that in the vast majority of cases, perhaps up to 90 per cent., bondholders, rather than face the trouble of reinvest-
ing the money at a time like the present—they would grumble of course and say that it was robbery—would accept a reduction of interest rather than face the trouble of having to reinvest the money. No one could say that they had been unfairly treated, or that we were in any way repudiating our obligations, because we should have given them an opportunity of being repaid in full if they so wished.
Take a particularly favourable case, in which 90 per cent, of the people elect to take the reduced interest rather than reinvest the money. In that case the Treasury would still have in hand,£90,000,000 for doing the same thing with the next batch of bondholders. The names could again be drawn to the extent of£90,000,000 and the bondholders duly notified in the same way. By this means it is possible to make a sum of£100,000,000 go quite a long way, and before it was entirely spent to persuade bondholders to the extent of£500,000,000 to convert their holdings from 5 per cent. to 4 per cent. I am putting forward that suggestion to the Treasury for what it is worth. It is a suggestion which no one can say is unfair or in any way a repudiation of our obligations; and if it was successful it would mean that one-fifth of the great burden of Debt which at present hangs over this country would be removed for good and all.

Mr. MARLEY: I am rather interested in the arguments put forward by hon. Members opposite. I have never been able to understand their very kind and courteous way in dealing with bondholders who are under a contract with the Government, when the Government treats all other contracts, when an emergency arises, as if they were mere scraps of paper. I know there is the fear of a collapse if we proceed by way of confiscation, but I want to suggest that investors are not such fools as Governments imagine them to be. If they were threatened with compulsory conversion, in a time of emergency they would either sell and call the Government robbers and thieves or accept the terms laid down. In the first case there would be a change over in the investment market, and on the transference of shares from one to the other there would be very little loss and very little gain. There would be those who would be prepared to take the offer and those who would want to sell rather than
accept the reduced percentage. In that case someone would buy at an advantage and get a higher rate over the whole deal than before. The Government, in the face of an emergency like the emergency which we are told to face, would have got the investing public on the horns of a dilemma. They would have to decide whether they would stand by the Government and accept the conversion, or sell out; and a large quantity of selling would reduce the price.
I want to return to the Budget itself which has been brought in under difficulties because we are told the nation stood in a position of difficulty. It is assumed that there was a deficit, there was bound to be a deficit, and that in order to meet this extra taxation had to be found. The arguments of hon. Members opposite proceed on the assumption that the increase of unemployment and the expenditure upon it has unbalanced the Budget, that increased expenditure is causing a loss of trade. The reverse is the truth. A loss of trade has caused unemployment and increased expenditure, which has unbalanced the Budget. It is the loss of trade which has caused unemployment, to start with, and being a country which will not stand by and allow its people to starve—chiefly due to the agitation of the working classes themselves—we have provided them with a meagre form of maintenance which has increased our expenditure. It is wrong to assume that it was the payment of unemployment benefit that caused the loss of trade. It was the loss of trade which caused the unemployment and increased the expenditure. Let me deal with the loss of trade first. We can trace it immediately after the War to the deflationist policy, the policy of getting back to gold parity, at a time when practically every economist who thought of the problems of the world knew that it was a false move.
I am thoroughly convinced that you cannot throw chunks of loans across the world and pay interest amounting to hundreds of millions without upsetting the whole balance of world trade. Until we get down to some organisation and regulation of this movement of hundreds of millions of interest right across the world, movement which has no connection with trade at all, which represents payment made to people who hold War
Loan or are entitled to reparations and so forth which are not related to trade, there is no way out of the difficulty in which we find ourselves. We on this side—no one else can claim credit for it—were the only people who said that you could not have reparations without damaging world trade, and that you ought not to carry out a policy of war debts, but that there should be—

The FINANCIAL SECRETARY to the TREASURY (Major Elliot): Has the hon. Member ever heard of the Balfour Note?

Mr. MARLEY: The Balfour Note said that we would not take more from the Allies than we had to pay to America. That was more or less its meaning.

Major ELLIOT: Surely the hon. Member is mistaken. The essence of the Note was "Let us wash these things out entirely, but if we cannot do that we will only take what we have to give."

Mr. MARLEY: That is quite true. Then we will bring Lord Balfour in and give him part of the credit. But Lord Balfour did not succeed in carrying his party with him.

Major ELLIOT: It was the official policy of the Conservative party.

Mr. MARLEY: I know, and he made a treaty which ultimately meant that we did not take more from the Allies than we had to pay to America. I have referred previously to the generous way in which we treated certain European countries and the very ungenerous way in which they acted later on. It seems to me that the chief difference between parties in this House, and particularly between hon. Members opposite and those who sit on this side, is as to what a Budget is for at all. It is a question of the attitude towards the whole of public expenditure. If we analyse the purpose of a Budget it is to meet what is considered by Members of the House of Commons collectively to be the necessary expenditure for public safety and the well-being of the people. It is believed by hon. Members opposite, and particularly by the Conservatives, that when the demands for the public safety have been satisfied—the police, the military and the Navy—anything else is a matter of extravagance which we can afford only in good times and which
ought to be curtailed in bad times. On this side of the House we cut right across that idea.
Hon. Members opposite assume that money will be best used if it is left in the pockets of those who do not necessarily earn it—if it is left to be used at the discretion of the individual. They assume that it is left in those pockets and used in that way it will be more beneficial to the nation that if we take any part of it away in taxation. We do take away part in taxation, and we on this side of the House believe in taking away more and more of the wealth by taxation for the purpose of social welfare and services connected with the wellbeing of the State. We are not extraordinarily philosophic in this. We have not invented any new idea. Even in a primitive community, on the plantation estate, the owner of slaves had to keep them reasonably fit and had to train them in an occupation if the plantation was to be a success at all. Under the laissez faire system of society to-day the individual employer is no longer the owner of the slave, to deal with him as he likes. The worker is provided with mere maintenance, if he is provided with anything at all. I know that this is well understood by the hon. and gallant Member for Kelvingrove (Major Elliot), because in his early Fabian days he had this philosophy to a very great extent.
We maintain that when you get individuals in a community employing people on a bare maintenance level, the State has a duty to these people, and that it should provide in other ways for their social well-being. That is the difference of policy, of course. Conservatives say that in pursuing this policy of welfare we have overstepped the line of prudence, and that if we pursue it further we will bring down the whole system of society and there will be nothing for anyone. With that view we on this side do not agree. All the talking of the Chancellor of the Exchequer and of the City could not persuade any thinking man that we are a poor country—could not persuade any thinking man who knows that we can produce far more than we can consume, and that that is equally true of almost every country in the world. What has happened is simply this: By a process of deflation in 1925 you curtailed your export trade. In curtailing your export trade you curtailed the source from which you got your revenue. At
the same time that you were curtailing the source of revenue you were increasing the expenditure on unemployment. They all arise directly out of the policy of deflation. Every economist in the country gave warning that when we got back on the Gold Standard the immediate effect would be a 10 per cent. increase of export prices.
One of the chief complaints I have to make against the present Chancellor of the Exchequer and his policy is that it is a deliberate attempt to get back to gold parity. The raising of the Bank rate to 6 per cent. was a move to prevent the easy flow of capital to investment in industry. I know it is argued that it was to prevent speculation with bank money on the exchanges, but its effect has been to prevent the' flow of capital from safe securities, what we call Government securities and trustee stock, into industry. I am not going to follow the right hon. Gentleman, the Member for South Molton (Mr. Lambert), in his statement that he does not think the capitalist system can revive. I do not think the capitalist system is nearly so exhausted in its resources as that. I am convinced, as I said in the first speech I made on the Finance Bill, that the statement made by the Prime Minister and the Chancellor that this country might follow the way of Germany, was to any thinking person sheer nonsense, because we are the centre and citadel of banking and commerce in the world, and the rest of the world could not stand by and let us go under. To talk over the wireless as if the pound might become worth not as much as a halfpenny stamp, was sheer nonsense and trying to frighten the people into a panic.
I would like the Financial Secretary to tell us candidly if, in his opinion, the Budget is balanced. I would like him to give us the estimate of his Department of what will be the return from the various sources of taxation. We hear the brewers saying that the Revenue is not going to get the expected return on beer, because people are consuming so much less of it. Will the hon. and gallant Gentleman give us an estimate of the effect, in terms of loss of revenue, if au increase of prices takes place, and also of the effect of the movement off the Gold Standard in regard to the interest on the loans which we got during the last week
or two that we were on the Gold Standard? Is it expected that the Government will be able to collect in this financial year all the new Income Tax which they have put on to people in very hard and difficult circumstances? Is it expected, for instance, that they will be able to get all the increased taxation from teachers. The teachers as a class will be taxed on the previous year's income, but they have had a 10 per cent. cut, and after the holiday period they will have to work out the whole of their own budgets for the year. Is it expected that they will be able to pay three-quarters of the taxation imposed upon them before April next?
Then, I would ask if the Budget is not balanced, how are the Government to save the pound from going in the way in which they said it might go, if these steps were not taken? What is the policy of the Government if America and Germany go off the gold standard and we get back to moving and fluid exchanges? That would mean that all the advantages that would otherwise have come to us as a result of getting off the Gold Standard, in the way of a bounty on our exports and an automatic tariff against imports, would disappear. If we are not going to get that advantage, if we are not going to have a revival of trade and thus an increase in the resources from which revenue has to come what are the Government going to do? The estimates of the Ministry of Labour predict that we may have from 3,500,000 to 4,000,000 unemployed before the end of the financial year. If these estimates are true and if some of the things are happening which we imagine are happening, but on which we have not the information possessed by the Financial Secretary and his Department, what chance is there of balancing the Budget?
What are the Government going to do, either now or after the next Election—because I expect that they will be the Government after the next Election—to prevent the country from becoming worse and worse? If they put themselves up as saviours of the capitalist system how do they propose to save it? Are they going to save it by further worsening the standards of life of the working classes? Are they going to save it by continuing the process of taxation, direct and
indirect, upon the lower levels of income? Are we going to have another Budget next year in which the same process will be carried further. If that is not going to be the case, then indeed I think that the capitalist system is finished, because we are assured by the Chancellor of the Exchequer that we can get no more revenue from those who have large incomes. We are told that the saturation point has been reached and that the man with£1,000,000, who at 5 per cent. is getting£50,000 a year, is now paying more than his income. Of course, that is the sheerest camouflage that the Chancellor of the Exchequer ever tried to put across. If the right hon. Gentleman had taken the case of a man of 69 years of age he could say that the payment of that man's insurance premium would be equal to practically the whole of what he was due to pay in Death Duties.
It is simply nonsense to talk about a man paying£53,000 out of£50,000. If we take the age at somewhere in the neighbourhood of 45 years, with an expectation of life of 14.9—the expectation of life in this country at the moment being 59.9—any insurance company would do a better premium at 45 than that which has been suggested in the other case. I observe that the Financial Secretary smiles. But even take it that you cannot get any more from these higher ranges of income. If you cannot get it from the higher ranges are you going to get it by indirect taxation, that is by huge taxes upon the mass of the people, or are you going to come down upon the lower ranges? If you cannot get it in the higher ranges there are two alternatives open—either to come down upon the lower ranges of income or else to go in for a policy of heavy indirect taxation. The latter would have the same effect upon the working class and the middle class by increasing the cost of living, as direct cuts in salaries or increases of Income Tax. We want to know, definitely, whether the Government are satisfied that they can get nothing more from the higher ranges of incomes and, if so, is their policy to attack and to retrench upon the middle-classes and the lower scales of income, and the working-classes of this country?

Viscount CRANBORNE: I do not propose to follow the hon. Member for North St. Pancras (Mr. Marley) in his
argument, except to make one remark concerning what he said about deflation. He repeated the argument which is constantly used on the other side that there was a deliberate plot to deflate wages and prices. I think that that argument is utter nonsense and that it is time it was exploded. Everybody knows that what has caused deflation is the scarcity of gold. A large amount of debt had to be paid to the Americans after the War. That debt could only be paid in gold or in goods. Owing to the high American tariff we could not get our goods in, and therefore we had to pay in gold and that is the whole answer to the argument of hon. Members opposite on the question of deflation. It is the greatest nonsense, and it is also rather wicked of hon. Members opposite to use that argument because they use it as an excuse for saying that there has been a bankers' ramp. There has been no bankers' ramp. This is the result of the War and War Debts—

Mr. MARLEY: May I point out to the Noble Lord that his argument amounts to this—that it is impossible to be a creditor country and to be a Protectionist country at the same time, because if you are a creditor country and put up Protection against goods coming in, you will become stagnated with gold. I want him to remember that. We are still a creditor country to a large extent, and I would like him to remember the effect of his argument when we come to the Election.

Viscount CRANBORNE: I think the answer to the hon. Member is that there is all the difference between a prohibitive tariff and a proper scientific tariff.

Mr. DEPUTY-SPEAKER: On the Third Reading of this Bill the question of tariffs does not arise.

Viscount CRANBORNE: I will not carry the matter any further. I will only point out that hon. Members opposite, both in the House and in the country, are constantly saying what the Socialist party will do if it comes into office. They say that they will settle the American debt and that they will see that this country is not in the hands of foreigners any longer. But they cannot deliver the goods. They might be able to settle the American debt if the Americans wished it, just as we would like to have it settled if it were possible
to do so. And the same thing applies to the foreigners. We are inevitably in the hands of foreigners. If foreigners like to put money into this country we cannot refuse it. If they like to take money away, we cannot refuse to allow them to do so. It is not right of hon. Members to go about saying, what the Labour party is going to do in these matters and trying to delude the people with the idea that they are able to do things which are quite out of the question. At the last Election they claimed that they could cure unemployment; but they could not do so, and unemployment grew much worse during their period of office. I admit that that was not altogether their fault; but they could not cure it, and they must not make the same kind of promises at the coming election, when everybody knows that they will be unable to fulfil those promises.
After that preliminary canter may I turn to the subject of the Budget? Like everybody on this side I hate this Budget. We all hate all forms of taxation. The Super-tax payer hates the Super-tax and the beer drinker hates the beer tax. The only difference between hon. Members opposite and hon. Members on this side is that we believe this Budget to be necessary and they do not. We believe that, without this Budget, the situation of the wage-earners and taxpayers of the country would be far worse than it is, owing to the fall in the buying power of the pound. In any case, even if we do not like this Budget, we dislike the remedy which hon. Members opposite put forward far more, and that is, as I understand it, to increase direct taxation.
I am a direct taxpayer, and I am speaking as a direct taxpayer, and I would like to utter a word of warning to hon. Members opposite as to the result of their policy. I do not want to talk from the point of view of the individual. Hon. Members opposite say that individual taxpayers still seem pretty well off and still walk about the West End of London and seem to be happy. That is true. It is true that even if you do tax the rich man heavily, he, still has a, certain amount left— [An HON. MEMBER: "He need not tighten his belt."] We all admit that, and I am not arguing from the point of view of the individual, but from that of the nation as a whole. I suppose
we all admit certain fixed principles, such as that taxation is necessary and that it must be on a steeply graded scale, and that people who have more money must pay on a higher scale than people who have less money. We all admit that, but there comes a point when high taxation is no longer in the interests of the nation, and it seems to me that that point has now been reached.
I do not want to quote more than is necessary those famous figures that always fill hon. Members opposite with such amusement, namely, the man with the£50,000 income who pays£53,000 out of it. I understand that they object to that calculation because, from what the last speaker said, they think it is unfair to include the insurance premium on his Estate Duties. I do not propose to include the insurance premium for the purpose of my argument, so I hope hon. Members opposite will regard this as a fair argument. If you take a rich man, a millionaire, with£50,000 a year, that man pays, apart from his premium,£28,000 in taxation. It may very well be that he prefers not to insure his life, lives to a ripe old age, and then dies, and is succeeded by his son. The son has to pay in Estate Duties about£500,000, and he will therefore be left with£25,000 a year, out of which he will pay in taxation£12,500. There is, therefore, a definite loss to the State of£15,500 in taxation, and that has got to be found somewhere.
Of course, the State may economise and cut its social services, but, I gather that that is not the ambition of hon. Members opposite, nor, for that matter, of hon. Members on this side either. The State has got to get it from somebody else, and the only people it can get it from are the poor people. That is not a mere academic theory. It has already happened. The right hon. Gentleman the late President of the Board of Trade has recommended the regrading of Income Tax to touch lower incomes, and it has been done in this Budget, and it will go on happening more and more, and must go on happening; because as you make the rich poorer, the poor themselves will have to pay more if the same amount of revenue is to be raised. I recommend that to hon. Members opposite as a very important argument. They may say that
the poor would not mind doing it if there were no rich, but that is not my experience.
There is another argument that I would like to advance. It seems to me undesirable to do it, from the Government point of view, for this reason. Suppose that you redistribute wealth, as you all wish to do, and supposing you tax a man who has£50,000 a year and you give£1 each, to 50,000 people. [Interruption.] It is not an unfair argument in principle. It is the logical conclusion of the policy of the Socialist party. Those people will all be better off to the extent of that£1 each. But if you ask them to take 10s. of it in direct taxation, they will think they are being very hardly treated and will say that their money is wanted, not for luxuries, but for the necessaries of life. But if you go to the rich man with£50,000 a year and ask him to pay£25,000 in taxation, he will grouse and grumble, but he will pay it, because he can afford to do so with what is surplus to his personal needs. In a democratic country it is difficult enough to collect taxation at all, and I put it forward quite seriously that it may be a great mistake to do away with those funds from which you can most satisfactorily, and indeed with great enjoyment to hon. Members opposite take a large part of the national revenue, and put it in the hands of the people from whom it will be difficult to withdraw it again.
I cannot help thinking that hon. Members opposite, in their policy of higher taxation, are warped by a deep-seated prejudice against the rich. They think it less important to make the poor richer than to make the rich poorer. If I am speaking the truth about a good many hon. Members opposite—and I think I am—they have every reason for satisfaction, because they are undoubtedly making the rich poorer every day. But they should remember this, that if they are making the rich poorer, they are making the poor very much poorer too. During the last two years, by their policy, as we believe, of heavy taxation of capital needed in industry, they have increased the number of unemployed to an enormous extent. All they have achieved is to starve the poor to spite the rich. Hon. Members opposite are welcome to any satisfaction they may get out of that policy. But we get no satisfaction out of
it. We believe that the policy of heavy taxation in which we have been indulging for a good many years is not in the interests of either the rich or the poor or of any section of the community.

Mr. EDE: When the Noble Lord says "we," does he include the present Chancellor of the Exchequer, whom he is supporting?

Viscount CRANBORNE: I cannot speak for the right hon. Gentleman. If I may say so without disloyalty, I was using the royal "we"! For those reasons, although I support this Budget in the Lobby because I believe it is necessary, I still enter a protest against the higher rate of direct taxation.

Mr. MacLAREN: Instead of discussing the Budget, we have been going into the Gold Standard and such questions, but before saying something myself about the Budget, I want to say a word about a heresy that seems to have prevailed in this Debate. I am astonished to hear the argument from this side of the House that others believe in leaving money in private pockets to fructify, but that we do not believe in doing that—as the hon. Member for North St. Pancras, who has just left the Chamber, said—but believe in taking more and more in the form of taxation from individuals. Another speaker on this side before that said that the State can spend the money far better than the individual. I am sitting on this side, and when anyone gets up on these benches and uses language of that kind, I wish to protest that I have never known anything more fatuous than the idea that a bureaucracy can come and collect money from individuals' pockets and spend it far better than can the individuals themselves. It arises from the fallacious idea that it is the function of the State to bring about something like equality in the distribution of wealth. Instead of removing the injustices which give rise to the maldistribution of wealth, it has become the new idea that we must have a very efficient form of bureaucracy in Whitehall, who, in their day and generation, will go about collecting money from those who have it, and spend it with greater wisdom among the poor.
I am not objecting to the use of public money raised either by taxation or local rates to see that the poor are fed. It
is true, on a generalised view of things, that this country is wealthy enough to maintain every human being in it in a certain measure of comfort and ease, and I would be the last to object to any form of raising money to maintain the poor and needy; but, to accept that as a sacrosanct principle, God forbid! If those who are in privileged positions in this country will hold on to their monopolies, and if by virtue of those monopolies they become powerful and wealthy and will not conform to social justice in the distribution of the wealth of the community, but only treat with contempt those who attempt to put before them the dictates of social justice, then they cannot escape heavy taxation. That is my attitude of mind, but to say that that is a natural condition of society is the outcome of confused reasoning. This confused reasoning is one of the things that lands this House constantly into a hopeless condition, and I often wonder what the community outside really think about us.
Act in such a way as to remove privilege and monopoly, and allow the wealth produced by labour to diffuse itself through society and not be congealed by privileges and vested interests, then you will not require to have a highly-paid bureaucracy acting like the balancing balls on a steam engine, and doing in an artificial way that which would have been done in a natural way if you had originally removed the powers of the vested interests. The Noble Lord the Member for South Dorset (Viscount Cranborne) pointed out that this Budget would make the rich poorer and the poor poorer still.

Viscount CRANBORNE: I did not say that especially of this Budget. I said that high taxation tended to have that effect.

Mr. MacLAREN: It all depends on the form of taxation you impose and on what basis you levy the taxation. If you put taxation on a proper basis, you may ease the whole of society and benefit it; indeed, I go further and say that taxation properly levied will raise the whole of society, but, owing to the canons now prevalent, every pound taxation you levy is making it impossible for the wheels of industry to go on. It is creating more unemployment and making the vicious circle more vicious than ever. Yet while you protest against it, while one
hon. Member after another gets up, especially on the other side, and says that taxation is impoverishing society—with which I agree—what is your alternative? If you will not change the canons of taxation, you must take the consequences of your wrong acquiescence in the present forms of taxation. I agree that as the present Budget, like other Budgets before it, is a Budget which makes imposts upon the value of the production of human labour, it is self-evident that taxation will make things dearer than they ought to be by the amount of the taxation, will create unemployment by their very operation, and will make a further demand on the part of the unemployed for more food—and you have come to a state of society when you dare not deny the unemployed food.
Now you have the vicious circle—unemployment growing by the operation of your Budget. Every hon. Member on that side admits that the operation of the Budget is to make the rich poorer and to hinder industry. I agree, and with the volume of unemployment growing and the unemployed demanding more food, the Chancellor has to come in. Many a day when I sat on those benches and the Chancellor of the Exchequer and the Minister of Labour asked for many more millions for the unemployed, I thought, "More millions to feed the unemployed, and these millions can only be raised by again putting the brake more heavily on the wheels of industry." While I agree that this Budget and other Budgets will have the detrimental effect of making industry slow down, making it more difficult for men who are genuinely concerned in business matters to face the consequences, I would say to hon. Gentlemen opposite that these things are inevitable until we come down to the fundamentals of the whole question of taxation.
The present Budget has come upon us as the inevitable consequence of the actions of this House. When I sat on the other side of the House at the time when the right hon. Gentleman the Member for Epping (Mr. Churchill) introduced his various Budgets, I remember how the House filled to hear him, to hear the scintillating paradoxes, the turned sentences and the gyrations of oratory of the right hon. Gentleman. How this
House is still fascinated by the man who can talk without reasoning! Look at the House now. If I were the right hon. Member for Epping, the House would be full; if I were the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) the House would be full, because when those right hon. Gentlemen speak the House expects to be entertained. When it comes to reasoning, where to-day are the clever Winstons and the brilliant Lloyd Georges? Until this House ceases to be an entertainment and more a place of reasoning, we shall have more of these clashes.
I remember on one occasion calling the right hon. Gentleman the Member for Epping the "Woolworth Chancellor." You could see with each succeeding Budget that he was becoming dried up in his resources for taxation. It was silk stockings, women's purses, mechanical clocks, and so on, a sort of running around the bargain basements of London to look for a new basis of taxation. What was the significance of that? It was that the Chancellor was faced with increasing requirements in his Budget and was running short of resources whereon to lay new taxes. Instead of laughing and enjoying the jokes and gibes and anachronisms of the right hon. Gentleman, we should have been carefully noting what his attitude of mind and conduct indicated. It indicated that we were running to the end of the resources of our present system of taxation, and looking to see what could be the latest device to which to resort. It was a clear indication that sooner or later the crisis which has come now was coming and would be inevitable. This House was amused rather than enlightened by the spectacle. I have often wondered what was the mentality of the Civil Service when they were told by the Chancellor to find out how many pieces of silk there were in a woman's bag when she comes in from France, or how many yards of silk there are in her dress, and to differentiate between one kind of silk and other. On many a night during that period this House was more like an emporium than the House of Commons, and all because we were looking for a fresh basis of taxation.
When the Labour party came into power I had my doubts and my appre-
hensions because when I looked at the Labour Front Bench, like the boy who saw the fly in a piece of amber, I wondered how in the name of God they got there. The present Chancellor of the Exchequer, if I may say so quite openly, was the only man for whom I had any intellectual respect. [Interruption.] Yes, I say so, and I am entitled to give my views. There were two years in which we were waiting to see if, with the change of Government, there was going to be a change of heart and of action. They were two years of delay, of nothing being done, with the unemployed making their regular demands, and, in order to stave off revolution or something worse, indebtedness being incurred in respect of the Unemployment Fund. One was waiting for relief, but loyalty dictated dumbness from the back seats, in order that we might see if something would happen on the Front Bench. Nothing happened. They carried on as if things were going to turn out all right somehow, and, despite the warnings given by the Chancellor, nothing was done. Suddenly, like a bolt from the blue, we were displaced, we have all got the sack, and now that I am over here I say, without any disrespect, that when I look on at the disaster in the country outside, when I look at our problems, which are menacing in form and force, I still look across at the Treasury Bench and wonder what is going to happen. I can see no device being put forward that will eradicate the troubles facing the country.
The Budget we are now discussing was inevitable; it is a patchwork piece of political make-believe to pass the Commons, but, let us make no mistake about it, it is based upon the hope that a certain amount of revenue will come in, and who knows but that in a few weeks those hopes will be disappointed. If the Budget is imposed with full force the net result will be to make industry slow down again. It means more imposts upon production, it solves no problem, it makes old problems still more difficult. I am not blaming those who are carrying it through. They had no other option than to act as they are doing. But this Budget will pass, and another Budget will have to come. Much wisdom will be required in handling the Budget that will succeed this one, for I quake to think of what will happen if
the assets which the country is now stressing by this taxation begin to disappear, and I am not sure that they will not.
We are told we are going to face an election. There will be all sorts of ideas thrown into the arena. Why is this House not attempting manfully to face historic vested interests, attempting to get into a proper co-relationship with nations abroad, why is it not realising that we cannot get wisdom out of an excited mob? We have been discussing the Gold Standard, the parity of world prices; problems that have been even too much, I am afraid, for experts to discuss in the committee rooms here. What sheer madness it is, at a moment like this, after passing a Budget which is pressing upon the real active producers, to throw these problems on the man in the street, who has as much knowledge of what they mean as the chair upon which the Deputy-Speaker is now sitting.
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I do not feel that one can rejoice in these circumstances. Is it not obvious that the British House of Commons, the finest weapon ever forged by the hand of man to bring a change into the social life of the people, the only instrument that stands between constitution democratic development and open revolution, is almost discredited, because those of us who come here have assented to its operation along wrong lines and have not had the courage to get back to fundamental principles. I am not discussing the Budget meticulously. I condemn it because it has every characteristic of the Budgets that went before it, but what I do say is this, if it is possible, for God's sake let the men who come here to be Members of Parliament follow less upon the old lines of clichés and soap box phrases; let them equip themselves as masters of the task they have in hand; understand the economics of the case with which they have to deal; try to understand the causes that have brought us to the pass we are in. A thousand times would it be better that we should have in this House a dictator than that its seats should be packed by men who are as much equipped for the job as the children unborn.

Mr. A. M. SAMUEL: I heard two words fall from the lips of the hon Mem-
ber—"fundamental principles"—and I think I detected what he meant; but it hardly lies in his mouth to find fault with the rhetoric, which according to him provides us with entertainment, ascribed to my right hon. Friend the Member for Epping (Mr. Churchill) and the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). We have just been treated to a rhetorical egg dance by the hon. Member, who has spoken for twenty minutes or more when all that he wanted to say by implication was that our form of taxation is wrong and that he would like now within the limits of Order, to recommend us to adopt taxation of land, a subject which is always at the back of the hon. Member's mind. I do not propose to follow him, in that theory, and will content myself with saying merely that I do not agree with him, and neither does the general body of the House.

Mr. MacLAREN: Then you must take the consequences.

Mr. SAMUEL: A great many speeches have been made on this Bill, and, so far as I can sec, there is very little left to say. Two speeches were very illuminating—those of the hon. Member for Aston (Mr. Strachey) and the hon. Member for Southampton (Mr. Morley). It would be discourteous to say they were based upon ignorance, but they showed a complete misapprehension of the facts. I know that I have attacked the Chancellor of the Exchequer on every possible occasion in this House in the past but I now feel some sympathy for him if he has been confronted with opinions and views such as those to which we have just listened from his former supporters. A statement was made by the Chancellor of the Exchequer that we are paying one third of our annual income in taxation and the hon. Member for Aston said he did not believe that statement.

Mr. NOEL BAKER: The statement of the hon. Member for Aston (Mr. Strachey) was that we were in fact paying one-third of our national revenue in taxation. The hon. Member further stated that that was inevitable under a capitalist system and that the only way to put things right would be to end that system.

Mr. SAMUEL: I did not understand the hon. Member in that sense but the fact remains that we are indeed paying£1,000,000,000 in rates and taxes out of a gross income of£3,170,000,000 and that statement is borne out by the Command Paper 3802 Treasury Return. Things have been brought to the present pass because hon. Members opposite, among whom is the hon. Member for Aston, have frequently stated that their object was to have a redistribution of wealth by the instrument of taxation. They have never addressed themselves seriously to the creation or increase of wealth. On the contrary they have always directed themselves to the splitting up of existing wealth with the result that our accumulation of wealth has not been able to bear the strain of the social services and the increase of the population. Hon. Members opposite should recollect that so far from their efforts helping to increase wealth a state of things has arisen in which no man would dare to put down a new factory in late years because he is so heavily taxed under the Income Tax and the Super-tax. This, with Death Duties has rendered it not worth while to embark on revenue yielding enterprises. The hon. Member for Aston seems to have forgotten that when a man starts a new enterprise and loses his money the State never comes round to help that man. It is for the State "heads I win, tails the taxpayer loses."
I have had considerable experience with Chambers of Commerce, and I frequently hear complaints of the constant abuse which is showered upon employers as capitalists. May I remind hon. Members opposite that capitalists are not all dishonest men, and they are not all hardhearted fierce unsympathetic men. In the past employers have been the revenue backbone of the country, and yet time after time they are abused and discouraged. Psychology goes a long way with some men. A man may be making a success of a new factory giving work to a number of men, and yet at the street corner near his factory men are found frequently standing on a soap box abusing such employers as capitalists. That is one of the reasons why the hon. Member for Aston should pause before he makes such statements as those to which I have alluded.
The hon. Member for Southampton in a loud and impressive tone said that he had
read in the "Economist" a statement that there were£2,000,000,000 of idle money lying in the banks of this country but I challenge him to substantiate that statement. "Idle money" he said. It must be remembered that of the£2,000,000,000 between 50 and 55 per cent, is already lent for overdrafts and advances. Another 20 or 25 per cent. of that total is represented by investments, bills discounted, securities, premises, acceptances, and other assets. Between 10 and 11 per cent. must also be kept as till money by the banks and balances at the Bank of England. When the hon. Member for Southampton tells us that£2,000,000,000 of idle money is lying in the banks he must be very ill-informed on this subject and he is giving a wrong impression to the country and talking nonsense.

Mr. MORLEY: But there would still remain a balance of£600,000,000, and that is eight times the£70,000,000 which is being put upon current taxation. My suggestion is that it would be better to raise that amount by an internal loan.

Mr. SAMUEL: I have not left the chamber since the Debate began and, as I speak only from memory, I cannot give a definite figure, but I suggest that from 50 to 52 per cent. of the£2,000,000,000 is already lent in advances and overdrafts; then there are acceptances, discounts, and bills of exchange; and probably another 10 per cent. is represented by investments. Treasury bills will represent 10 per cent. I think Treasury bills in issue represent about£600,000,000 and they play an important part in the total of the banking£2,000,000,000 of deposits. I am reminded that there must also be a 10 per cent. liquid margin retained for till money to meet ordinary bank operations and for the balances kept at the Bank of England to settle differences through the clearings of the cheque system. I speak as a layman and unprepared with statistics. The consequence is that, so far from there being£2,000,000,000 of "idle money" that has been now reduced by£1,400,000,000 on the hon. Member's own admission, and on further examination it will be found to be reduced by a still further£200,000,000 or£300,000,000, so that the net result is that there may be, perhaps, 10 per cent., or£200,000,000, in liquid assets spread over the whole banking system of England, for the purposes
of international exchange for clearing house, and other necessities of banking. The whole argument of the hon. Member is therefore shown to be fallacious and even foolish. I hope he will not repeat it again anywhere if only for his own reputation's sake. He asks why should we not have raised an internal loan, and he says that there is no relationship between sterling and raising the internal loan. But you cannot raise an internal loan here and get it over our frontiers in paper, not in gold or goods remember, at a time when the foreigner, and particularly the American, is looking very much askance at our paper. You cannot pay an external debt with an internal paper loan—

Mr. MORLEY: I did not suggest that you could. What I said was that the raising of an internal loan would not have an adverse effect on the foreign exchange.

Mr. SAMUEL: The raising of an internal loan here would have further deepened our debt and hurt our reputation for solvency at a time when the adverse position of the sterling exchange was causing a weakness in exchange which we have sought at any sacrifice to prevent. Not only would further internal borrowing here, as we now know, shake the position that we hold in the mind of the foreigner, but it must be remembered that even when a State borrows abroad, it cannot pledge anything except its own good faith and its own credit, and, if you weaken your credit by borrowing more anywhere you cannot keep your full power to support exchange.

Mr. GEORGE HARDIE: Would not the fact of our borrowing internally show other countries our power and wealth, and, therefore, have an effect the reverse of what the hon. Gentleman is suggesting?

Mr. SAMUEL: If I were to go to my banker to borrow a large sum, I venture to think he and others who knew would regard my position as a great deal worse than if I did not borrow. Let me pursue the argument of the hon. Member for Southampton. It makes me very unhappy when I hear in this House an argument which I know, and which the hon. Member must know, to be fallacious.
Such arguments, when they are addressed to the House in this way, get outside and do immense damage.
Let us look at what the difficulties of the Chancellor of the Exchequer must have been before he came over to this side if he was faced with hon. Members of his own party talking like the hon. Member for Southampton. [Interruption.] Our trouble was that our imports were greater than our exports, and consequently we could not pay for what we had bought. Our oversea trade balance had disappeared to nothing. It was given as plus£39,000,000 up to last December; but, although we have not seen what the position is up to-day, we are feeling it without seeing it; we are on the minus side; our exports, visible and invisible, are not enough to pay for our imports and that was reflected in our sterling exchange when we went off gold. There is now the point which is made by hon. Members opposite about reducing our consumptive power by stopping certain expenditure. He complains of the consumption being reduced. That consumptive power is spent for the most part in imported food, clothes, other imports, and so on—[Interruption]—but if that expenditure were not reduced, our adverse balance of imports over our exports would be even greater than it is. The first thing that would happen then would be that you would not have enough exchange—there would not be enough debts due to you from abroad—to pay the money that you owed for imports; and the next thing that would happen is exactly what did happen—the foreigner could not get exchange, and he took gold.
After the gold was gone, you would have to mobilise what you have in the way of suitable foreign securities, and you would find it very difficult to sell them. We still hold a fairly large amount of securities in American currency, such as first-class dollar securities secured upon American railroads; but it would be impossible to sell them abroad in anything like the volume that the British Government would require. During the,War we parted with£1,000,000,000 of overseas dollar and franc and other foreign securities. We have reinstated that£1,000,000,000, but for the most part it has been reinstated in securities expressed in terms of sterling. Of course
there is a large number of bonds which we could have taken over to America and sold or borrowed upon up to a year or two ago but which are no longer acceptable to American or French buyers or lenders. Take the case of Chilean bonds; Chile is now a defaulter. Brazil also is a defaulter. I do not know much about the Argentine, but I think that Argentine bonds might be handed over but at about half their former value. But, if we handed over securities expressed in sterling, secured in foreign investments of ours like Argentine railroads, it would reduce our power to sell machinery from the Midlands to those railways. It is necessary for us to hold control of our industrial investments abroad secured on railway and trading debentures and so cm, so that we in this country may get orders for the supply of rolling stock for those lines and materials generally. People may talk about mobilising foreign securities, but there is a great deal to be said before the matter can be dismissed in those few words.
When you have parted first with your gold and then your securities, and when the exchange is against you and the foreigner will not take your paper, what are you faced with then? You are faced with starvation. Internal loans are completely useless. What is the hon. Member for Southampton going to do with his internal loans. The Bank of England told the late Government that there was going to be a fall in the exchange, and that, if they could not stop it by one, two, three, or more, expedients and put the exchange right we should not be able to buy imports. Then, as we have only a very few weeks' supplies of corn and other foodstuffs in the country, we should be in the position of seeing our fellow-countrymen starving—not 2½ millions unemployed, but 20 millions starving. When hon. Gentlemen opposite suggest the raising of an internal loan, I do not wish to be rude and say that they are ignorant, but I do say that they are very ill advised in making use of that argument. The hon. Gentleman who opened this Debate fell foul of the word "rentier," and said that there were too many rentiers. "Too many." Before I deal with the hard material side of that argument, let me say that where there are no rentiers in a nation you never get art or literature. Without the rentier you
would have had no John Crome of Norwich, who painted the Poringland Oak, or Gray, who gave us the Elegy—

Mr. G. HARDIE: Did Burns belong to that crowd? He was a plebian.

Mr. SAMUEL: Without the existence of wealthy people you can never have ally of the softnesses of civilisation. For instance, you would never have had Wagner's music if he had not been taken care of by a King of Bavaria, a rentier in ercelsis. [Interruption.] When people abolish the rentier, they must be prepared at the same time to give up any hope of the softer pleasures of Art, Literature, Music and Drama being brought into existence. It is patently so in the history of the world. Wealth and the refinements of civilization are interlocked. Who are the rentiers? He quoted those idle, vulgar, stupid people of the illustrated weekly papers who may figure in the divorce court, on the Lido, or may be seen on every racecourse. There may be 5,000 of them in our population of 45,000,000, we are not responsible for them and we despise them more than do hon. Members opposite. Probably most of us on this side know nothing about them and we do not intend to be tarred with the brush that is put upon them or told that they represent our solid hard working middle class and upper class. They do not and they count for nothing.
There are 7,000 men and women only with incomes of£5,000 a year or more. There are only 97,000 people in Britain who have an income of over£2,000 a year. That income as assessed to surtax is£540,000,000 a year. Supposing you take every farthing away from those people. Most of them work; some are purely rentiers, perhaps living on invested savings. Strip them of the whole of their income, it yields£55,000,000 a year in taxation. Divide it up amongst the 45,000,000 population and you will give to each person 7d. a day. What is 7d. a day? I know it means a 4 lb. loaf of bread, but it will not make or mar the whole position. When you have taken that money away from the 97,000 tax payers and distributed at sevenpence a day per person you will not be able to raise your£55,000,000 of sur-taxation and you will have to take it out of some-
one else. That£55,000,000 of surtax is a very useful amount of money and is part of the general revenue.
The fallacy based on the fact that a third of the whole of the British income is going in taxation and rates and the utterly baseless argument put forward by the hon. Member of the£2,000,000,000 of idle money in the banks are very barren arguments to bring before the House. Were we not in the greatest peril, not one of us on this side would vote for this Bill. We and people like us have to pay and we are willing to do it. I am not grumbling. We have to get the country out of a mess. But we are not the people who got the country into the mess. Every time we have tried to develop industry, we have been discourage and opposed. Whatever blame can rest upon anyone will rest upon hon. Members opposite and soon it will be told the nation frown every platform in the country.

Mr. BARR: Perhaps I may be allowed to ask for the indulgence of the House, because by the votes of my colleagues I have been promoted to this Front Bench. Until I heard my hon. Friend the Member for Burslem (Mr. MacLaren) a few minutes ago, I did not know that it was such a badge of intellectual inferiority to be on the Front Bench. We were told that this Bill had for its main purposes to preserve the Gold Standard, to balance the Budget, and to restore the credit of the country. The first of these purposes has already passed. The Gold Standard has gone. What was depicted as the direst of catastrophes was received with complacence and, indeed, in many quarters was heralded as the advent of a new era of prosperity. We were told by the Conservative press that it was one thing to suspend gold payments by a Socialist Government and that the suspension of gold payments under a national Government was quite another thing. We had headlines about the revival of the export trade, and those who had spoken with hated breath as if the breakdown of the Gold Standard would be the end of the world now began to look at it as the dawning of the milennium and a new era of trade, until cautious newspapers like the "Glasgow Herald" called upon all to abate this orgy of jubilation. Then we learned that the patient was still sick and that a
specialist was to be called in and a doctor's mandate was to be given. When things are serious and a specialist is called in and a doctor's mandate given, it is generally a very near thing between a kill and a cure, and, if the Prime Minister, who has been called in as specialist, had been present, I would have warned him that if all his skill and the undoubted medical skill of the Financial Secretary to the Treasury has been applied to the National Government and the National party, then I can only predict that there will happen to them what happened to the Emperor Trajan, on whose tomb they put the inscription:
Here lies the Emperor Trajan who may thank his physician that he died.
This is a Budget which is not designed to advance social services, but rather to stabilise them and to call a halt in expenditure. The right hon. Gentleman the Member for South Molton (Mr. Lambert) spoke strongly of the need of restricting expenditure, and he said that the more we spent the more wages would go down. When he was reminded that the Liberal party had been all the time urging us to still greater expenditure—that was the meaning of the Yellow Book and of their constant urge to us to take up more public schemes—his answer was, in an interruption, that he had voted against those things all the time. So he was giving us another illustration that the party to which he belongs—I suppose it will carry on the same policy in the new National party—went on the philosophy of Hegel, namely, progress by antagonism. He made one statement, however, which I think was very valuable. He said that if we purchase goods from abroad we should require to have work here to produce commodities with which to pay for those imported goods. I think that that is a very sound doctrine. It means that when we import goods we are not necessarily depriving the workingmen in this country of their labour, but may in some way be providing labour for them.
As another evidence of the stationary quality of this Budget we had the statement made by the President of the Board of Education a few nights ago—it was sincerely meant—that we could not advance meantime in social services, and particularly in education, but that we
should make our advance when times improved. I should like, in reply, to say that there are certain social efforts in which you cannot stand still, or indeed move slowly, without going back. I remember reading the story of Parry's Arctic Expedition in the year 1827 when, although they kept on laboriously marching, they only advanced the sledges two or three miles a day toward the North Pole, and eventually Parry had to reveal to them that the ice floes were being driven by the Arctic currents far swifter southwards than they could march forward, and that they were receding constantly from the Pole in spite of all their efforts. And in matters of education and the like, if you stand still or advance slowly, the currents that are beneath the May Report and the currents that are beneath the National Government will, unless we stem them—and I believe we shall stem them—carry us ever further from our social goal.
The Budget is said to be based upon the doctrine of equality of sacrifice. I have heard the right hon. Gentleman the Chancellor of the Exchequer present three Budgets to this House. I remember the Budget he presented on the 14th April in the year 1930 in which he increased the Income Tax, the Surtax and the Estate Duties, and I remember him explaining with pride—and we carried it to the audiences we addressed in the country—that in imposing taxation he had not put a single penny more of taxation on the man with three children, if he were drawing his income from investments, unless he had as much as£735, or, if it was earned increment£882. He told us at the end of that Budget speech that two great principles had actuated him. The first was this. He said:
I am determined, however burdensome it may be, that the country shall pay its way by honest methods.
I wish to pay the sincere tribute to the Chancellor of the Exchequer that I believe, as I believe now, he was acting and seeking to act upon the principle of making the country pay its way by honest methods. The second principle he enunciated was:
In imposing additional taxation I have done so by placing the burden on the shoulders best able to bear the weight."—[OFFICIAL REPORT, 14th April, 1930; col. 2680, Vol. 237.]
What we miss in this Budget is the putting of the heavy burdens on the broad backs and the lightening of the burdens presently resting on the weak shoulders. The other night in speaking upon the Finance Bill and upon the subject of equality of sacrifice the Noble Lord the Member for Oxford University (Lord H. Cecil), who, I am sorry to say, is not in his place, used a remarkable argument. He said that the wealthy man who had to pay 60 per cent. of his annual income in taxation was paying out of his own whatever the sacrifice might be, whereas the unemployed man with a 10 per cent. cut was only subject to a limitation of a gift of other people's money. I think that that was a travesty of the position of Unemployment Insurance. He also asserted that the property owner had what he called the moral right of the whole of his wealth. We hold the Noble Lord the Member for Oxford University in honour, and I have always honoured him as a noble representative of a great Christian Church, but he must know that for the first three centuries the Christian Church assailed by her great preachers and her great writers the moral right of private property as we now know it. Chrysostom, the greatest preacher of the Christian ages, assailed that right and pleaded for common ownership and common control of goods. Through the middle ages the great schoolmen right down to the Reformation, and some of them beyond, condemned investment and interest on which private property is founded, declaring that it enabled people to live without work and that it was contrary to Nature, contrary to Aristotle, and contrary to the Scriptures. [Interruption.] I should like to read a quotation from one of the greatest of scholars, John Wyclif himself. John Wyclif said:
The successful capitalist must be wicked, or he would not have been poor yesterday and rich to-day.
If the Noble Lord bad been present I would have reminded him that John Wyclif was not only a great scholar, but was Master of Balliol when there was a more enlightened Oxford than there is to-day. The Lollards said it was through the peasantry and their toil that the great lords had their right, and GO they reversed the order of the Noble Lord. They said it was the peasants that had the moral right, and it was the great
lords that had the gift which was not really theirs. I take the statement made by the hon. Gentleman the Member for Fareham (Mr. A. M. Samuel) a few minutes ago that he might have to draw on some of his capital. I am sure that excites the pity of those on this side at least who have no capital on which to draw. I say that there is no comparison between that and the sacrifices of the poor who have a struggle, the awful severity of which is known only to themselves, when it comes down to food and clothing and the children going bare. And yet you are now putting upon them greater sacrifices than any of these. One of the noblest pieces of eloquence in this country is that passage of Earl Chatham's about the poor man's castle, in which he said that the poorest man might in his cottage defy all the forces of the Crown and that even the King of England dare not cross the threshold of the cottager's ruined tenement. Now, you are making it the law of Britain that the Poor Law officer may cross the threshold of the ruined tenement, even if the King may not. [Interruption.] I am speaking of the man who is out of employment through no fault of his own. In the words of a poem which was made not by a rich capitalist but by the poor man's poet of Scotland, we are told of the glorious privilege of being independent. When you bring the Poor Law officer into that man's home you are making the iron enter his soul and subjecting him to a, sacrifice to which no sacrifice in this Finance Bill or the Economy Act is to be compared.
One thing is evident increasingly in the events of these days, and it brings us to the fundamental position regarding wealth. We see more clearly than ever that real wealth does not consist in gold or silver. Under the mercantile theory of old, it was held that wealth lay in the accumulation of silver and gold, but Adam Smith, in reply to that theory, defined wealth as the abundance of consumable goods, and that gold and silver were only the means and instruments of their exchange. When it was said to him that consumable goods were perishable and that gold and silver were durable and might be accumulated together for ages, to the incredible wealth of the country, he replied that hardware also was durable and that it might be accu-
mutated for ages together, to the incredible augmentation of the pots and pans of the country. We realise that a miser or a national miser has no real happiness. He is of all men the most miserable, and I do not think that either France or the United States are very happy to-day. In the "Times" of Tuesday last the Paris correspondent said:
The vast mass of gold held in this country,' until recently regarded by the French people as a whole with complacency, if not with pride, is beginning to lose its attractiveness in the realisation that unless some constructive use is made of it, not only is it merely unprofitable, but actually harmful.
We admit the value of gold as a means of exchange. We admit the importance and necessity of balancing the Budget. The hon. Member for Aston (Mr. Strachey) spoke as if we held an opposite line. I am unaware of our ever showing other than a desire to balance the Budget, but in a different way from that put before us by the present Government. We are still one of the greatest creditor countries in the world, and our taxable capacity is far from exhausted. The noble Lord the Member for West Derbyshire (Marquess of Hartington) said that we had reached the maximum of Surtax and other imposts. That has been said ever since there was an Income Tax and ever since there was any tax or any increase of taxation. In regard to taxation and economy he said that every economy came out of someone's wages. It is equally true that every curtailment of the spending power of the poorer classes of the people, in some way comes out of someone's wages, whereas every increase that can be legitimately given to the poorer classes percolates in purchasing power.
He drew a contrast between the spending power of individuals and of States. He said that individuals spent on wages and that the State spent on the relief of unemployment and the like. If you reduce from 17s. to 15s. the amount of unemployment benefit for a single man you are drying up trade just as much as you do when you impair the spending power of the wealthy magnate. Every shopkeeper will soon realise that the spending power of the people has been impaired. The Noble Lord the Member for
South Dorset (Viscount Cranborne) said that it was well to have wealth accumulated in a few hands, because it was easy for the State to come in and collect its revenue. That is to make the landlords of the country tax collectors. He further asked, how could we recover taxation if there was an equal distribution of wealth divided in small holdings all over the country? Our answer is twofold. In the social amelioration that would be attained you would have less need for many social services. You would not have need for unemployment benefit and no need for the Poor Law and other social services on the supposition that wealth was equally distributed. The other answer is, that if you have a happy, contented and prosperous people the Chancellor of the Exchequer will soon know were to find his Revenue.
The hon. Member for Farnham (Mr. A. M. Samuel) said that we were doing a great deal to worsen the social position by speaking against capitalists. It is not our habit to speak against the individual capitalist. We regard him as a victim of the system. It is the system that we are against. If we are worsening the situation in that sense, it is equally true to say that it is worsening the situation when anyone speaks of the workers as work-shies or as spongers. The latter description was used the other day by an hon. Member opposite.
What are the resources of this country? In the 73rd Report of His Majesty's Commissioners of Inland Revenue for the year ended 31st March, 1930, we have an assessment for Income Tax made up to the 30th April, 1930. We find that 97,696 persons had an income of over£2,000 a year, and that their total income was£541,319,350. We find also that there were 130 persons with an income of over£100,000 per annum, and that their income amounted to£24,885,634. Turning to Estate Duty we find that in 1929–30 fifteen persons left£32,703,675. [An HON. MEMBER: "I wish it had been more!"] My reply to that observation is, that when I was standing as a candidate in 1924 I was asked, in view of the fact that I was a minister of religion and a Parliamentary candidate, how I could serve both God and Mammon. I answered that last year 17 men died in this country leaving behind them£41,000,000, and I said—

Lieut.-Colonel Sir FREDERICK HALL: How much Death Duties?

Mr. BARR: Even at the highest rates only 50 per cent.

Sir F. HALL: Only!

Mr. BARR: I think hon. Gentlemen might let me develop my argument. Seventeen men in 1923 died leaving that sum of money. I said that that was some service of Mammon and that I thought that I could serve God in seeking to bring to an end a system that makes such a colossal and baneful service of Mammon possible. These are not the only indications of the wealth of this country. A report from the "Times" of the 22nd September, 1931, says:
We still possess unimpaired enormous inherent wealth and productive power, which after all are the only true guarantees of financial stability.
Wealth is of little use unless it is available for all. In 1843 Thomas Carlyle wrote his book "Past and Present" in a time of famine and great distress, and he wrote this:
England is full of wealth, a multifarious produce, supply for human need in every kind; yet England is dying of inanition.
He said that while there was famine, the granaries that lined the quays were all bursting with grain. Then he gave out his great dictum:
"In the midst of plethoric plenty the people perish.
That is as true to-day as it was then.
I honour the efforts that are being made by the Chancellor of the Exchequer and by those with him. I know that their aim is to give security to our currency and thereby security to our people. Security is a great thing. France and other countries are calling for security against foreign foes. We are seeking to bring security to the currency, but there is a security yet more fundamental and that is security for the poor, for the workless and for those who have no helper. For a generation we have been engaged in building up a vast social edifice to give to them a measure of food, of warmth and of comfort. That social structure is now threatened:
An age will scarce suffice to build a State;
An hour may serve to lay it in the dust.
We believe that there is wealth enough to maintain unimpaired that social fabric, and to develop these social services, and we will rally to the support of the great and beneficent social fabric which, through our wonderful generation, we have been building up with so much struggle and with so much toil.

Mr. P. SNOWDEN: I can assure the hon. Gentleman that he has my most profound indulgence and sympathy. I cannot pass without observation the fact that he has spoken from the Opposition Front Bench during the discussion of this important Measure without the support of a single one of the leaders of his party—[Interruption.]—and without more than two other occupants of the Front Bench. The absence of the so-called leaders of the party has been a marked feature of all the discussions during the last few weeks. The Leader of the party has led the party from sonic recess behind the Speaker's Chair. His example has been followed by the subordinate leaders of the party. There has not been on that Front Bench to-day a single Member of the Cabinet of the late Government. [Interruption.]

Mr. ATTLEE: The right hon. Member for Central Edinburgh (Mr. W. Graham).

Mr. SNOWDEN: The right hon. Member for Central Edinburgh looked in for a minute. [Interruption.]

Mr. F. SMITH: Where is your Leader?

Mr. SNOWDEN: I happen at the moment to be discharging that position, so far as this Bill is concerned. The right hon. Member for Central. Edinburgh (Mr. W. Graham) has been absent from the House for the last three hours. He is supposed to be the great financial authority among those who sit on that side of the House. I am not aware that he has taken part in the discussion upon the Committee stage of the Bill. He has indeed not spoken at all on the Finance Bill. He has spoken twice in the earliest stages of the discussion upon the Financial Resolution. I can understand, or at any rate I can think of, many reasons that are apparent for the absence of the right hon. Gentleman. I suppose there are some remains of consistency left among certain of the hon. Members opposite and the right hon.
Member for Central Edinburgh probably felt some amount of diffidence in opposing the Budget which is modelled very largely upon the suggestions that he himself made.
3.0 p.m.
The hon. Gentleman the Member for Motherwell (Mr. Barr) will believe me when I say that there was a contrast between the speech that he has just delivered and that of the hon. Gentleman who opened the Debate on behalf of the Opposition. I take no exception to anything that he said, although we had very little reference to the Finance Bill which is supposed to be now before the House. We have had some most admirable moral precepts, with which few hon. Members would disagree, but any criticism of the Budget itself has been lamentably absent from his speech. The speech of the hon. Member for Limehouse (Mr. Attlee), who opened this Debate, must have cost him a great deal of time in its preparation, and the reception of it was not at all commensurate with the labour which that preparation entailed. Feeling the coldness with which his polished epigrams were being received, he had to appeal to the House for cheers. His speech reminded me of a saying of Disraeli's describing, an amateur debating society—in which the hon. Member has evidently graduated—that the speeches contained a superabundance of intended sarcasm. The hon. Member paid me the compliment of saying that I was a master of invective, but I must say that his attempt to imitate my invective was a lamentable failure.
The hon. Member began by saying that his party were wholly opposed to the Bill—wholly opposed. Where are the 240 or more Members of the party? I forget the exact number; I think it is about 280. Where are they? They are not wholly opposed to this Bill this afternoon. As a matter of fact, as I have pointed out before, this Bill is just the Bill they would have introduced, with the support of the last Cabinet, had not the hon. Member and other Members of the Cabinet and of the Government been dismissed from their office. Wholly opposed! Every one of the proposals, the financial proposals, of this Bill were agreed to by the late Cabinet. The hon. Member spoke about the haste with which this Bill was being rushed
through the House. Probably he was not present two days ago when the party opposite were not able to occupy the time in Debate, the very limited time, that had been allotted to them under the Guillotine Resolution, and the House adjourned before the end of the allotted time.
In the earlier part of his speech the hon. Member complained that I did not deal with the financial position of the country in my Budget last April. He complained about the Economy Committee. The hon. Member helped to set up the Economy Committee, and with the exception of fewer than 20 every member of the Labour party voted for the setting up of that Committee. I put before the House of Commons and the country last February a statement of the financial position. I never received one word of public support for the position I put forward from any Member of the then Government which is now in opposition; not one. I not only put the position before the House of Commons, but I addressed a special meeting of the Labour party, and in what I expected would be the secrecy of that meeting—secrecy which was afterwards betrayed—I spoke much more frankly than I had spoken to the House of Commons. What support did I get there? I got none. The only thing they did was to talk the usual clap-trap about going to the Super-taxpayer.

HON. MEMBERS: You taught us.

Mr. SNOWDEN: Yes, I tried to teach you, but I was terribly disappointed that my teaching was neither understood nor appreciated.

Mr. T. KENNEDY: What did the Prime Minister say to you about your speech?

Mr. SNOWDEN: That Committee was set up. The hon. Member repeated today what had been said by other speakers in the course of the Debate. He said that I ought to have done something in the Budget of last April.

HON. MEMBERS: So you ought.

Mr. SNOWDEN: Why did not you make that criticism then? The answer to that is quite clear, and I think it will penetrate the brains of hon. Members opposite. I said then, and I
repeated later, that the economies which were necessary could never be carried through this House merely on the support of a minority Government. If hon. Members will do me the fairness of reading my speeches, they will see that over and over again I said that the enforcement of economies was such an unpopular thing that they could only be carried through either by a united House of Commons or by a large majority of the House of Commons. We had to wait for the report of the Economy Committee, for the report of a Committee set up by hon. Members opposite, and as soon as that report was received we acted upon it. Fortified by that, we have come to the House of Commons and submitted these proposals—proposals of economy which were accepted by the late Cabinet, and proposals that were suggested and pressed by some of those who ought to be sitting on the Front Bench opposite were rejected by the present Government as being undesirable to impose.
The right hon. Gentleman the nominal leader of the Labour party made some complaint, in a speech in the country the other day, about the way in which the Budget had been balanced. The right hon. Gentleman in a previous speech in the country said that he was in favour, under certain conditions, of a revenue tariff. He was not quite sure whether he was in favour of a 20 per cent. or a 10 per cent. tariff, but at any rate he was in favour of a tariff, and we have been told by the official organ of the Labour party—the figures were given in that organ—that 15 out of 20 of the members of the late Cabinet voted for a revenue tariff. I believe the statement was further made that a number of them were in favour of a whole-hog policy, including the taxation of food and of raw materials. The right hon. Gentleman the Member of Burnley (Mr. A. Henderson) in order to meet what was necessary for the balancing of the Budget, was prepared to put on, I will not say a 20 per cent. tariff but a 10 per cent. tariff. He told the Trades Union Congress that he would have been prepared to impose s, 10 per cent. tariff. [HON. MEMBERS "Rather than cut unemployment benefit."] Yes, rather than cut the unemployment benefit. I was waiting for that. What does that mean?
Instead of taking 10 per cent. off the unemployment benefit, the right hon. Gentleman was prepared to impose a 10 per cent. tariff upon the cost of living of the unemployed and the people of this country. And it would not have been a 10 per cent. increase in the cost of living to them, because a 10 per cent. tariff means, when it comes to the consumer, at least an addition of 5 per cent. on that. That is the policy which was favoured by the right hon. Gentleman. The Labour party is now enrolled under the banner of a 10 per cent. tariff.
I turn from the right hon. Gentleman to the other speakers who have taken part in this Debate. The hon. Member for Southampton (Mr. Morley) made a speech some of which was most admirable. He made a very reasoned and practical contribution to our Debate. I think that some of his suggestions were quite reasonable—at any rate, they were put forward in the very best spirit. The hon. Member said that, instead of meeting the cost of unemployment benefit out of current revenue, we ought to have borrowed. The whole purpose of this Bill and the whole purpose of balancing the Budget is to avoid borrowing. Borrowing is a sign that, if you are not already there, you are going rapidly to a state of national bankruptcy. The hon. Member said that the money was in the banks. He said that they had£2,000,000,000 in the banks which they did not want—just as though those bankers have no greater regard for their own interests, than to keep£2,000,000,000 in their coffers earning nothing. As a matter of fact, we could not have borrowed any more for unemployment benefit.
What else did the hon. Member suggest? A public loan. A public loan from whom? Did he mean that you should go to the wicked bankers and the avaricious investors who have been denounced hour by hour from those benches—[HON. MEMBERS: "And by you?"]—to go to them, and ask them to come to your assistance and provide funds by borrowing for the maintenance of the unemployed? The fact of the matter is that I do not think that you could have borrowed and, suppose that you had tried to issue a loan for borrowing for the unemployment benefit, do you think there would have been any public
response to that? If you had tried to issue a dole loan, there would have been—[An HON. MEMBER: "Patriotism!"] But I understood that those people from whom you expect these resources have no patriotism.
The hon. Member for Aston (Mr. Strachey) also made a very valuable contribution to our Debate, but he made it to empty benches on his own side. I wish they could have heard that speech, the main point of which was this: Referring to an observation of mine that we were now taking in taxes, local and national, nearly one-third of the national income, he inquired how long we could go on doing that. That is a most important question. I have answered it briefly on former occasions, and I have said that, with a declining national income—of course, that is the point—and increasing taxation, you are rapidly reaching the rapids, and you pass over them unless you do something to arrest your course.
I do not say that this Budget is going to deal permanently with the national financial position. A great deal more will have to be done than the balancing of this Budget. The most important question at the moment is to increase the national productivity. We can afford in prosperity things we cannot afford in a time of depression. The nation is like an individual, and when an individual's expenditure is exceeding his income, if he be a wise man, he tries to do two things, to reduce his expenditure and to increase his income. The State must do the same, or the State will arrive at the position which a man living beyond his income will reach, and that will be the bankruptcy court.
The hon. Member for Aston also referred to the question of the exchanges. That is one of the important questions, and the Government are considering it. But he also pointed out that, so long as other countries remain upon the Gold Standard—and there is no doubt a large measure of truth in this—we, being in the position in which we are to-day, gain an advantage so far as our export trade is concerned, but, if other countries come off the gold standard, that advantage will rapidly disappear. But I may say this, because I do not think this point has been sufficiently made, and I think it is of
the greatest importance: This country is in a position dissimilar from that of any other country in the world in regard to its foreign trade relations. We have to buy from abroad vast amounts of raw material, including food, and a depreciated exchange means that we shall have to pay considerably higher for those things. Now food, just like raw material, enters into the cost of production, and therefore on the balance—I express no dogmatic opinion whatever—even with a depreciated exchange, with the advantage we get in exports and the disadvantage to our imports, I doubt whether we gain any real benefit. The hon. Member for Aston, after an admirable analytical speech, finished by saying that all the efforts that we were making were futile and that nothing would save the situation except the abolition of capitalism. I am very sorry to have to say that I cannot introduce into a Finance Bill proposals for the abolition of capitalism. I shall have to leave that for somebody else. I have very often told my Friends on that side of the House that any attempt to abolish capitalism—I mean any catastrophic attempt—will bring far greater conditions of disaster to the people than those under which we are suffering.

Mr. BROMLEY: We all know that.

Mr. SNOWDEN: That is something at least that I taught my colleagues in the Labour Party. May I say something on the concluding observations of the hon. Member who has just sat down, who quoted figures of Income Tax and Super-tax. I am not questioning his figures, and they are not out-of-date as applied to the time to which they refer, but they do not apply to-day, because there has been such an enormous fall in the dividends received from ordinary shares and the like and a failure of many companies to meet their debenture interest. I am criticised for not having taxed the resources of the rich much more highly than I have done in this Budget. My difficulty in the Labour party has always been that they could never understand a wink. I always had to explain to them what was behind a proposal that I was making. They never could be satisfied with just accepting a thing as being a stepping stone to something else.
I see from the public Press that a revised programme is to be submitted to the conference of the Labour party. The programme of the Labour party still remains as it was set forth in "Labour and the Nation." I must confess that I have never read "Labour and the Nation." There is, however, a summary of the proposals which I have read, and I made a calculation of what the cost would be. It worked out at something like an additional£1,000,000,000 a year to the national expenditure. Therefore, let my hon. Friends on the other side remember that if that programme is to be carried out they ought not to blame me for leaving some treasure in the locker which will be available for them. This Budget, with all its shortcomings, has been welcomed with unparalleled acceptance by the whole country. It places the internal resources of the country upon a sound financial basis, a basis
upon which we can build, and it is as was said by the President of the League of Nations Assembly a few days ago, an example of the inexorable determination of the British people to face up courageously to adversity.

Question put, and agreed to.

Bill read the Third time, and passed.

The remaining Government Orders were read, and postponed.

ADJOURNMENT,

Resolved, "That this House do now adjourn."—[Major Sir George Hennessy.]

Adjourned accordingly at half after Three o'Clock, until Monday, 5th October.